Why is communication considered essential in ORM?

Communication is deemed essential in Operational Risk Management (ORM) because it fosters a risk-aware culture among stakeholders. Effective communication ensures that all parties involved understand the nature of the risks the organization faces, the strategies in place to mitigate those risks, and the responsibilities of each stakeholder in managing those risks.

When communication is active and clear, it encourages transparency and openness, which are critical to identifying and addressing operational risks effectively. A risk-aware culture means that everyone from top management to individual employees recognizes potential risks and is empowered to take proactive steps to mitigate them. This cultural shift is vital for fostering an environment where risks are discussed openly and managed collaboratively, ultimately reducing the likelihood of operational failures.

The focus on creating a risk-aware culture also aligns with the need for ongoing engagement and education about operational risk, allowing the organization to adapt and respond to changing conditions effectively. This culture is fundamental to the success of any ORM program, enabling organizations to navigate risks more adeptly.