Operational Resilience and Operational Risk Management are two key concepts essential to any organisation's success. While these terms may seem similar, they have distinct differences and similarities that set them apart.
This blog will detail the differences and similarities between operational resilience and operational risk management.
Operational resilience is the ability of an organization to withstand and recover from operational disruptions, whether caused by internal or external events.
Operational resilience involves identifying critical business functions and ensuring they can continue operating during a disruption. It also involves developing plans to recover from the disruption and return to normal operations as quickly as possible.
Operational risk management is a structured approach to managing the risks associated with an organization's operations.
Operational risk management involves identifying, assessing, controlling, and monitoring risks arising from an organization's activities. It aims to minimize the likelihood of operational failures that could lead to financial losses, reputational damage, or regulatory penalties.
Differences between Operational Resilience and Operational Risk Management
| Operational Resilience | Operational Risk Management |
| Definition | |
| takes a broader view of risk, including risks that arise from external events, such as natural disasters or cyberattacks. | focuses on risks that arise from internal processes and systems, such as technology failures or human error. |
| Objectives | |
| focused on ensuring that an organization can recover quickly from disruptions when they do occur. | is primarily focused on avoiding operational failures |
| Scope | |
| takes a more holistic view of an organization's operations, looking at the entire organization and its interactions with external stakeholders. | focuses on specific areas of an organization's operations, such as IT systems or supply chain management. |
| Proactive Vs Reactive Approach | |
| involves a more forward-looking approach to risk management, as it requires organizations to anticipate and plan for potential disruptions | is more reactive, focusing on identifying and addressing previously materialised risks. |
|
Role of technology |
|
| is one of the vital component | plays a more central role because many operational risks are related to technology failures, such as system outages or cyberattacks. |
| Collaboration with Stakeholders | |
|
involves a more collaborative approach to risk management, requiring input from various stakeholders, including employees, suppliers, customers, and regulators. |
is typically more focused on internal processes and systems and may not involve as much collaboration with external stakeholders. |
Similarities between Operational Resilience and Operational Risk Management
| Proactive Approach to Risk Management |
| involve a proactive approach to risk management. Organizations that proactively identify and manage risks are more likely to avoid or minimise operational disruptions' impact successfully. |
| Identify and Manage Risk |
| focused on identifying and managing risks that could impact an organization's ability to operate effectively. |
Summing Up ...
While operational resilience and operational risk management are related, they have different focuses, scopes, and approaches. One is proactive, while the other is reactive.
Supplementary Explanations
More Information About Operational Resilience OR-5000 [BL-OR-5] or OR-300 [BL-OR-3] Course
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