In Review
No Excuses Approach to Managing Operational Risk
No Excuses: A Business Process Approach to Managing Operational Risk
Authors: Dennis I. Dickstein and Robert H. Flast
Publisher: John Wiley & Sons
Publication Date: 2008
Length: 308 pages
Price: $68.50
ISBN-13: 978-470-22753-4
Source: www.wiley.com
Virginia A. Jones, CRM, FAI
Organizations are becoming increasingly aware of the need for both risk process management and business process analysis and management to effectively manage the bottom line, shareholder value, business reputation, and survival – and most organizations look at each separately.
Too often, upper management is not aware of the specific operational risks, defined by the Basel Committee as “the risk of loss resulting from inadequate or failed internal processes, people, and systems or from external events,” until a costly disruptive event occurs. Even in those organizations that support mitigation of risk, it is considered the norm to look at it from the viewpoint of its return on investment or cost containment.
No Excuses: A Business Approach to Managing Operational Risk proposes that operational risk should be examined through the business processes of an organization. The authors recognize that integrating business process management with operational risk management can dramatically increase an organization’s optimal business performance.
Their book provides a practical approach to help identify and mitigate operational risks and shows how those risks can be directly linked to the business process flows for all industries. It takes readers through four steps to identify:
- Where their organization is now
- Where it wants to be
- How their organization can get there
- What the next steps are
No Excuses includes case studies and corporate examples to clarify both the need for the approach the authors discuss and the results of implementing their proposed processes. The book demonstrates and discusses a framework for operational risk and a framework for business process management – and then overlaps them into one integrated framework that allows them to work in tandem to effectively manage and mitigate operational risk and improve business processes.
According to the authors, for the integrated framework to work most effectively, “the organization must, beginning at the top and through all of the business functions, truly and fully embrace the concept and the hard work of managing risk.” This can result in the organization having “a business process approach to managing operational risk and having a governance structure for ensuring all risks are uncovered.”
Of interest to the records and information management practitioner, a discussion on the role of technology in the organization and its effect on the integrated framework emphasizes all organizations’ increasing reliance on technology. The more technology is relied upon, the greater the threat of the risk when the technology fails. The book gives guidance on how to manage technology to enhance the effectiveness of the integrated framework.
Another pertinent element of No Excuses is a discussion about the role of organizations in the integrated framework. The authors discuss how people and organizations can be a source of process failures and the means to fix deficiencies and improve processes. To balance this dichotomy, they suggest organizations should:
- Have procedures, controls, testing, training, and monitoring in place to minimize people failure
- Hire and use the services of a professional to develop and execute a proactive organization risk management program
The integrated framework approach to business process management and organizational risk management helps an organization align the two processes and control existing risk and potential risk, as well as unreported risk. No Excuses is useful for understanding both processes and the role they play in an organization’s risk mitigation success.
Download the complete PDF version here.
Virginia A. Jones, CRM, FAI, can be contacted at vjones@nngov.com.
From January - February 2012