Report - November 2024
Over the past 10 years, financial services have undergone a transformation that has brought together, at speed, new digital technologies, business models, service offerings and partnerships.
To help the financial services industry understand the consequence of this transformation for operational and non-financial risk (ONFR), we are exploring whether the business transformation has affected ONFR profiles and priorities to the extent that firms need to fundamentally change how they manage ONFR.
We engaged with approximately 50 CROs and other senior risk leaders from our membership, asking them:
- Whether ONFR is increasing
- Whether and how ONFR is changing
- Whether ONFR management needs to change
- What successful ONFR management will look like in the future
We've drawn the results into a complimentary report which sets out our strategic vision for the future of ONFR. This report captures the spirit of those conversations. It delves into the characteristics of successful risk management, provides a path forward for ONFR and highlights essential new capabilities and insights.
The leaders we spoke to for this report came from small firms and large, from banks and insurers, and from Europe, America, Asia, Australia and Africa. They were a diverse group. Yet the messages we heard were strikingly consistent and emphatic, and echoed the changes in both the business and ONFR transformation.
Every single risk leader was aware of the challenge and was responding in some way. The consistent view was that to successfully balance risk and reward, ONFR needed to match the speed and scale of the digital business. It must support the business to deliver change safely, look ahead to emerging risks, and connect the dots to offer a whole assessment of risk.
Synthesising all our conversations, we have drawn up a vision statement for the value that ONFR can contribute to the success of firms.
Risk leaders are already taking steps towards making the vision a reality, and a common path forward is starting to emerge.
Laying foundations fit for the future
First, leaders are creating foundations that are fit for purpose, which are an essential precursor to digitalisation:
Governance
Coordinate activity across a growing set of 2LOD functions to develop single ONFR view.
Culture
Develop positive risk culture, balancing risk and reward.
Skills
Upskill team by adding digital & business skills to existing risk base
Framework & tools
Balance simplicity with flexibility and consistency. Find sweet spot where frameworks & tools are easy to use but are robust enough to manage risk appropriately
Digital core
Then they are building a new digital core for risk to match the digitalisation taking place in the business, embedding data-driven risk management of core business at speed and at scale
New capabilities and insights
And finally, they are creating new risk capabilities and new risk insights:
Outside in
Expand the scope of data collected from ecosystem and environment.
Change
Increase resources and capabilities in change management.
Emerging risk
Improve sight of emerging risks and ability to respond rapidly.
See the whole
Have a balanced prioritisation based on whole impact, particularly reputation.
Connect the dots
Break down the barriers and develop a single view of risk to the business.
Download the full report for free to learn more about the pathway to success and to discover ORX's vision for the future of ONFR.
Interested in reading more about our vision for ONFR?
Not an ORX member? You can download a complimentary copy of this paper.
Find out more about ORX Membership
ORX Membership is an ever-expanding global community, sharing knowledge, expertise and experience within ONFR. We provide loss data and support for the banking, insurance and asset management industries. Members get access to an extensive library of resources, including reports, benchmarks and industry standards and libraries.
Through ORX Membership you can:
- Join our virtual communities of operational risk professionals
- Take part in research projects and benchmark studies with your peera
- Attend one of our many events to network with leaders in the industry
Luke Carrivick
Executive Director, ORX
Simon Wills
Senior Board Advisor, ORX
Steve Bishop
Research and Information Director, ORX
Roland Kennett
Membership Director, ORX
