The Increasing Importance of Operational Risk in Enterprise Risk Management

Leadership, Risk Management

The Increasing Importance of Operational Risk in Enterprise Risk Management

28 Feb , 2015  

Enterprise Risk Management, as a corporate undertaking, has its deepest roots in financial services. Historically, for banks and insurance firms, the focus within enterprise risk has largely been credit and market risk. The Great Recession of 2008 showed us that liquidity risk and the interplay between a firm and capital markets were also important to consider. Now that sufficient time has passed since the Great Recession, we see that credit and market risk were not the sole causes. Indeed, critical operations and processes at many lending institutions failed. Underwriting procedures, loan processing, and the like were subject to little if any confirmation and oversight, leading to larger and higher credit risk positions than anticipated. Operational risk had reared its ugly head. The wave of regulation that has overtaken the financial services industry since then is largely driven by concerns over processes and procedures that caused harm to customers. The impact of processes and policies has never been greater. There are drivers at work to suggest that operational risk is still increasing, and that in particular, firms should be mindful of certain risk drivers, in the context of enterprise risk management, such as Increasingly Complex Operations, Development of New and Untested Products, Automation and Digitization, Increasing Reputational Impact from Operational Risk, New Focus of Regulators on the Treatment of Customers as Victims, and lastly, Cyber Risk. The disturbing and uncomfortable reality is that operational risk is unintended and, in theory, should not happen, if critical processes are well designed. Operational risk is self-inflicted, or if not self-inflicted, it is the result of unexpected errors or mistakes, all proving to be much more costly and dangerous than initially anticipated. Therefore, this leads firms to pay specific focus on operational risk management as part of enterprise risk management.


Professor Walker provides keynote talks, seminars presentations, executive training programs, and executive briefings.

Recent talk topics enjoyed by clients have included:

From Big Data to Big Profits: Getting the Most from Your Data and Analytics”

“Data Monetization”

“Leveraging Artificial Intelligence and Automation at Work”

“Winner Take All – Digital Strategy: From Data to Dominance”

“Success with an Inter-Generational Workforce: From Boomers to Millennials”

“FinTech, Payments, and Economic Trends and Outlooks in Consumer Lending”

“The World in 2050: Risks and Opportunities Ahead”

Exceptional executive training programs have included:

“Digital Disruption, Automation, Analytics, Data Science, the IoT, and the Big Data Wave”

“Master Course on Operational Risk: Measurement, Management, Leadership”

“Complete Course in Risk Management: Credit, Market, Operational, and Enterprise Risk”

“Cyber-security Training: Prevention, Preparation, and Post-Analysis”

“Managing Your Brand and Reputation in a Crisis.”

“Strategic Data-Driven Marketing”

“Enterprise Risk Management and the CRO”

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By  -      
Russell Walker helps companies develop strategies to manage risk and harness value through analytics and big data. He has done novel research in data monetization and digital disruption and advises leading firms on these topics. As Director of Experiential Learning in Analytics and Associate Teaching Professor of Marketing and International Business at the Foster School of Business, at the University of Washington, Dr. Walker is an academic thought-leader on analytics. Russell Walker has developed and taught leading executive programs on Big Data and Analytics, Strategic Data-Driven Marketing, Enterprise Risk, Operational Risk, and Global Leadership. Previous to moving to Seattle and the Foster School, Dr. Walker was Clinical Professor at the Kellogg School of Management of Northwestern University, where he founded and taught many popular courses in analytics and risk management. His is the author of the book From Big Data to Big Profits: Success with Data and Analytics (Oxford University Press, 2015) which examines data monetization strategies and the development of data-centric business models in the new digital economy. He is also the author of the award-winning text Winning with Risk Management (World Scientific Publishing, 2013), which examines the principles and practice of risk management as a competitive advantage. Dr. Walker consults with firms on the topics of Big Data and Analytics, Data Monetization, Risk Management, and Business Strategy. Russell Walker can be reached at: @RussWalker1776

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