Engaging employees in risk learning is a challenge. However, risk awareness is vital. Discover how to simultaneously engage your staff and reduce risk.
Compliance training plays a significant role in mitigating operational risk, and involving employees actively in this process enhances its effectiveness. We were recently joined by industry expert Swapan Sawhney to discuss the importance of engaging employees in risk learning to reduce operational risk.
Operational risk presents significant challenges to businesses, particularly in areas such as data entry, internal control failures, inadequate IT infrastructure, and data management. However, motivating employees to actively participate in risk learning can be quite a hurdle.
Operational risk refers to the possibility of experiencing losses due to insufficient or unsuccessful internal processes, personnel, and systems, or due to external occurrences. This definition encompasses legal risk but does not cover strategic and reputation risk.
For operational risk to be truly understood throughout the organisation, it's important to get the tone right from the top. It needs to be given priority in an organisation and made clear that it is a priority.
Well-trained employees are better equipped to identify and mitigate risks, contributing to improved risk management processes. This, in turn, helps prevent some of the main consequences of operational risk, which include public censure, reputational damage, and potential impacts on the company's share price.
Moreover, compliance training reduces the likelihood of changes to senior management and the need for multi-year remediation programs due to non-compliance issues. Ultimately, a compliant workforce enables firms to navigate business development without constraints and maintain a competitive advantage.
"I think the key in complying with mitigating actions is using data to demonstrate the impact of not complying and why each person within an organisation plays a part in anticipating risks such as fraud, legal risks
Some of the key takeaways from our webinar session indicate that firms can mitigate negative consequences by improving risk management practices, enhancing reporting mechanisms, and promptly addressing identified issues to ensure effective risk mitigation and business continuity.
One of the main issues is employee engagement in training. We posed the question of what the most challenging barrier is to engaging employees to our webinar audience. The results are unsurprising, with a lack of perceived relevance and understanding and time constraints being the biggest hurdle to overcome.
"I think the key to complying with mitigating actions is using data to demonstrate the impact of not complying and why each person within an organisation plays a part in anticipating risks such as fraud, legal risks, fiduciary risks etc. From experience, the best way to do that is for senior management to message that front-line teams should make time to focus on these issues and that within front-line functions, such matters are regularly discussed in team meetings so that it is a natural part of their day-to-day roles."
- Swapan Sawhney, Managing Director, Riskcom Solutions
It's important to ensure employees can engage in risk learning by helping to identify areas where staff lack expertise in understanding relevant laws and regulations, as well as pinpoint instances where roles and responsibilities are unclear. This helps to target learning for individuals. Some other methods include:
Our newly-accredited Global Risk library offers a wide range of risk management courses. The e-learning courses in our library provide a quality standard of training which has been approved by the IIRSM. These courses are designed to train your staff in risk fundamentals and application and are available in 11 languages.
The negative consequences of operational risk can be significant. These can stretch from financial loss and reputational damage to disruptions in operations and everything in between.
In our webinar, we asked the audience what operational risk area they considered the most significant for businesses. Although the results indicate failure of internal controls as the most significant area, the interaction between all these operational risk components is what regulators are concerned with.
Here is a breakdown of what to monitor in these key areas of operational risk:
Engaged employees act as a vigilant human element, actively participating in risk identification, reporting, and mitigation efforts. Our compliance digitisation tools transform staff compliance with innovative delivery of training which forms the foundation of risk management.
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