Coronavirus: the first lessons

  • 10 July 2020

What has the operational risk community learnt from the Covid-19 pandemic?

We live and work in an environment shaped by the coronavirus crisis and its social and economic consequences. The operational risk profile of financial organisations has changed, and a proactive operational risk function is imperative as organisations attempt to deliver their critical services in unprecedented times.

This report offers some early thoughts on what operational risk has learnt from the crisis. It is a “first draft” of history, and we appreciate that many organisations are still dealing with the day-to-day challenges of the pandemic. Its contents is based on conversations with operational risk professionals at more than 100 firms, as well as press coverage of the pandemic. We reflect on what went well, what could have been improved and what steps operational risk might take after the crisis to improve its organisation’s resilience (and its own standing within the business).

Download the report

ORX Coronavirus the first lessons - a view from the operational risk community

ORX Coronavirus the first lessons summary report - what operational risk did well and what could have been improved

Overview

What went well

Operational risk leaders have reacted fast and helped keep businesses going thanks to their flexibility and agility, all grounded in many years of experience and their strong relationships with senior business leaders. They have positioned themselves as collaborators and enablers, able to inspire confidence and offering valued opinions on how to manage risk and controls.

Emerging themes from coronavirus lessons learnt report

What could have been improved

Although the response has been impressive, unsurprisingly there have also been challenges. In particular, a lack of clarity over the complexity of third party dependencies has led to heightened risk and vulnerabilities. In addition, some risk tools have bent under the stress. Real-time data has proved hard to come by and scenarios were not built around such a severe event.

Lessons learnt as we move beyond the crisis

The risk profile has changed, with conduct, legal, reputational and people risk all moving towards the top of the agenda. Operational risk will need to adjust accordingly. Some practices that were relaxed during the crisis will need to be reinstated, but this is a chance for organisations to evaluate what controls they really need as they seize the opportunity to build a more streamlined business-centric approach to managing operational risk.

Three ambitions may well drive such change: striking the right balance between agility and assurance, maintaining operational risk’s role as a valued and trusted partner to the business, and building a risk culture that finds the middle ground between people and processes.

As organisations start to look past the immediate crisis to what lies beyond, we conclude with some thoughts on what topics the operational risk community can collectively explore and some ideas that may help guide those conversations, from collecting only the data needed to make effective commercial decisions, to keeping employee resilience top of mind.

Join a global community of financial firms managing operational risk together with ORX

At ORX, we believe we're strongest when we work together. We bring operational risk professionals together to share experiences, ideas and data, and during the coronavirus pandemic we've really seen the value of our community!

Join over 100 financial firms who get exclusive access to our global loss data, high-quality research, working groups, events and more all designed to enhance your operational risk management with ORX Membership.

Find out how ORX Membership can help you manage operational risk

Download the report to read more

ORX Coronavirus the first lessons - a view from the operational risk community

ORX Coronavirus the first lessons summary report - what operational risk did well and what could have been improved

Coronavirus resources

Take a look at the other resources we've created to help you manage operational risk through the coronavirus crisis.

Coronavirus resources