[OR] [Pillar] [E1] [C1] Operational Risk Management as a Key Pillar of Operational Resilience

eBook 1: Chapter 1

Operational Risk Management as a Key Pillar of Operational Resilience

Introduction

In today’s increasingly complex and interconnected business environment, organisations face a wide spectrum of operational risks arising from internal processes, human factors, systems, and external events.

These risks—if not properly managed—can disrupt critical business services, damage reputation, and lead to financial and regulatory consequences.

At the same time, organisations are expected not only to prevent disruptions, but also to withstand, adapt to, and recover from them.

This broader capability is known as operational resilience, defined as an organisation's ability to continue delivering its critical operations in the face of disruption.

Within this broader resilience framework, Operational Risk Management (ORM) plays a foundational role.

Understanding the Role of ORM in Operational Resilience

Operational resilience is supported by four key pillars:

• Operational Risk Management
• Business Continuity Management
• Cyber Resilience
• Third-Party Risk Management

Among these, Operational Risk Management is the first and most fundamental component, as it provides a structured approach to identifying and managing risks that could lead to operational disruption.

Operational Risk Management is defined as:

A continual, recurring process that includes risk assessment, decision-making, and implementation of controls to reduce, mitigate, avoid, or accept risks.

In practice, ORM involves:

• Identifying potential operational risks
• Assessing their likelihood and impact
• Implementing controls to manage them
• Monitoring and reporting risk exposures

This systematic approach enables organisations to minimise the likelihood of operational failures and limit their impact.

ORM as the Foundation of Resilience

Operational resilience builds upon the outputs of ORM.

While ORM focuses on preventing and mitigating risks, operational resilience extends further to ensure that organisations can:

• Continue delivering critical business services during disruption
• Recover within acceptable timeframes
• Adapt to evolving threats and operating environments

ORM contributes directly to this by:

Risk Identification and Visibility

ORM provides a structured mechanism to identify risks across:

• Processes
• Technology
• People
• External dependencies

These identified risks form the basis for resilience planning.

Risk Assessment and Prioritisation

Through risk assessment, ORM helps organisations:

• Determine which risks are most critical
• Prioritise resources toward high-impact threats
• Align risk exposure with risk appetite

This supports the identification of critical business services, a core requirement of operational resilience frameworks.

Risk Mitigation and Control

ORM ensures that appropriate controls are in place to:

• Reduce the likelihood of disruption
• Detect failures early
• Limit the severity of incidents

These controls enhance the organisation’s ability to withstand disruptions.

Continuous Monitoring and Improvement

ORM is not a one-time exercise but a continuous process. It enables:

• Ongoing monitoring of risk indicators
• Early warning of emerging threats
• Continuous improvement of resilience capabilities

The Interdependency Between ORM and Operational Resilience

Operational Risk Management and Operational Resilience are closely interconnected but distinct disciplines.

Operational resilience incorporates ORM as a core component, using its outputs to build a more comprehensive capability that addresses both known risks and unforeseen events.

In essence:

• ORM reduces the probability of disruption
• Operational resilience reduces the impact of disruption

Key Message of This Chapter

The central message of this eBook is clear:

Operational Risk Management is not separate from Operational Resilience—it is a critical building block of it.

Without effective ORM:

• Risks remain unidentified
• Vulnerabilities are not understood
• Controls are insufficient
• Resilience strategies lack a foundation

Conversely, strong ORM practices enable organisations to:

• Anticipate disruptions
• Strengthen internal controls
• Build robust resilience strategies
• Enhance overall organisational stability

As highlighted in the BCM Institute framework, implementing effective operational risk management practices directly contributes to building a more resilient organisation.

Operational resilience cannot exist without a solid understanding and management of operational risks. Operational Risk Management provides the discipline, structure, and insights necessary to identify vulnerabilities and reduce exposure to disruptions.

However, resilience goes beyond risk management—it ensures that even when risks materialise, the organisation can continue to operate, recover quickly, and adapt to future challenges.

This eBook will further explore how ORM integrates with other pillars of operational resilience, ultimately demonstrating that:

Operational Risk Management is the starting point—and an indispensable pillar—of a truly resilient organisation

Gain Competency: For organisations looking to accelerate their journey, BCM Institute’s training and certification programs, including the OR-5000 Operational Resilience Expert Implementer course, provide in-depth insights and practical toolkits for effectively embedding this model.