Covid Risk Review
- 8 June 2020
How is coronavirus impacting op risk profiles?
Since the outbreak of pandemic in early 2020, ORX has hosted weekly meetings that enable our membership to discuss the impact of the coronavirus (Covid-19) pandemic and understand how the industry is responding.
From these discussions, it soon became clear that the pandemic had caused a rapid change to – and ongoing evolution of – operational risk profiles.
To help the industry understand this further, we launched the Covid Risk Review to survey how individuals from across our global membership view the current operational risks facing the industry. Download the report to read the results in full.
Coronavirus has significantly changed operational risk profiles
When compared with the results of the ORX Operational Risk Horizon 2020 study (published in February 2020), it is clear that over a short period of time the overall operational risk profile of the industry has changed significantly:
- Business continuity was ranked the most significant risk and a significant driver, up from 11th place in the Horizon 2020 report. This highlights the nature of the current situation and strengthens the need for the existing regulatory focus on operational resiliency.
- Organisations’ reliance on third parties for critical processes and services has been exposed, as the third parties’ operational and financial resilience are brought into question.
- People cut across the risk profile as both a risk and a driver of risks, rising from 12th place in the Horizon 2020 report to being the 4th most significant current risk.
- The current climate is creating the potential for increased fraud, driven by a combination of factors including control environments adjusted for home working, the economic downturn and cybercriminals exploiting fears around the pandemic.
- Many of the top risks are interconnected, with changes driven by several key factors, including people, organisational and third party resilience, and macroeconomic factors.
- Regardless of the specific risk, the vast majority of responses reported an overall increase in risk exposure levels.
The risks or the consequences of the crisis?
It will be interesting to see whether the views expressed in this survey change as the pandemic plays out and the industry moves towards the new normal.
Does the picture presented reflect the risks of the crisis as opposed to the risks that may rise in importance as a consequence of it? Will we see a surge in conduct risk as a result of organisations having to deliver government-led products quickly or reduce staff supervision when managing customers? Will internal fraud increase due to control environment and process changes?
Reassessing the landscape throughout 2020
We'll re-run this survey on a periodic basis over the remainder of 2020. This will help you to see how the situation is developing and how operational risk is being impacted.
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