Operation Risk Management Training

Operational risk management training courses instruct attendees on how to prevent operational losses.

An operational risk management training curriculum familiarizes course participants with the tools and techniques that a corporation typically uses to prevent losses. A firm's top management generally supports this training initiative because it helps employees stay up-to-date with regulatory guidelines, professional risk management procedures, and industry practices.

Purposes

An operational risk training program helps an attendee understand various types of operational risks implicit in corporate activities. For example, a course participant may learn that operational risks may arise from employee error, neglect and carelessness as well as technological malfunction. A training session also may cover risk management procedures--such as internal controls, risk and control self-assessment (RCSA) reports and audit reviews--that departmental heads and segment employees use to prevent operational losses.

Types

Types of operational risks vary, depending on the industry, the company size, regulatory guidelines and the corporation's legal status. These risks may relate to conformity to regulations (noncompliance risk), control problems and information systems breakdowns (technology risk). To illustrate a financial services company, such as a mutual fund, which does not conform to rules promulgated by the Securities and Exchange Commission (SEC), may incur significant losses if fined. The mutual fund also may suffer losses if its technology infrastructure fails to operate in financial transactions.

Features

A risk management curriculum may cover several topics, depending on staff needs and level of expertise. For instance, a small pharmaceutical company may teach its middle-level managers how to apply generally accepted auditing standards (GAAS) in establishing operationally adequate and functional procedures. The company's information technology (IT) personnel may learn IT control policies recommended by the Information Systems Audit and Control Association (ISACA). Alternatively, a sales and marketing analyst may learn about fraud detection tools such as monthly bank reconciliations.

Benefits

A risk management training course has many benefits for attendees. Assume a financial services sales representative attends a training program. He may learn about techniques that a financial auditor uses to detect operational defects impacting corporate financial statement presentation. Alternatively, he may familiarize himself with technology risk management tools. A bank cashier may stay up-to-date with the latest regulatory requirements in the banking industry. A licensed professional, such as a certified public accountant (CPA), may also benefit from a training program because she may use courses taken to meet continuing professional education requirements.

Expert Insight

An operational risk management training program often may cover topics that are difficult or in which corporate staff does not have expertise. In such cases, a program supervisor may hire a specialist to help explain complex topics. For instance, a course coordinator may hire a CPA to explain various fraud detection tools that an auditor uses when reviewing financial statements.

References

• Banking and Finance: Course Overview
• Air University: Marine Corps Institute: Operational Risk Management
• Federal Aviation Administration: Chapter 15: Operational Risk Management (ORM)

Resources

• The Institute of Management Accountants
• The Institute of Internal Auditors
• CFA Institute
• Information Systems Audit and Control Association