What is the proper order of the five steps of the orm process? a ) assess hazards; identify hazards; make risk decisions; implement controls; supervise b ) identify hazards; assess hazards; make risk decisions; implement controls; supervise c ) identify hazards; assess hazards; supervise; make risk decisions; implement controls d ) assess hazards; identify hazards; supervise; make risk decisions; implement controls e ) identify hazards; assess hazards; make risk decisions; supervise; implement controls
The correct answer is b) Identify Hazards; Assess Hazards; Make risk decisions; Implement Controls; Supervise
It is a fact that all organizations have different strategic objectives and that the level of risk exposure also varies from company to company. However, the risk management process always has 5 basic stages that determine the level of maturity of risk management within the entity.
First stage: traditional base
At this stage there is no formal structure to address the risks. Thus, when considering that risks are always present, risk managers act independently.
To verify losses, the area of compliance depends heavily on internal audit. As at this stage the risk culture is not widespread at all levels of the company, there is a total dependence on the quality and integrity of the officers and shareholders to maintain adequate control of the events.
Second stage: awareness
This stage of the operational risk management process is reached by companies that establish a specific area to manage risks. Define policies, responsibilities and support tools.
Third stage: monitoring
After having identified all the risks, it is important to interpret their impact on the business processes. At this stage of the operational risk management process, the current risk level and the effectiveness of the risk management functions are monitored.
Fourth stage: quantification
This is one of the stages of the operational risk management process in which the organization obtains greater maturity. In this phase, the institution already has a better understanding of its situation regarding exposure to operational risk.
Fifth stage: integration
The importance of operational risk management is recognized by all areas of the business, which are concerned with fully integrating the quantification of all the organization's risks, and are not limited to considering operational risks. In this sense, quantification is applied to strategic planning and to the improvement in the quality of processes.