What is the first step of ORM?

What is the first step of ORM?

• A. Implement controls
• B. Assess
• C. Identify
• D. Make risk decisions

Answer: (C)

The first step of Operational Risk Management (ORM) is to identify hazards. This involves recognizing potential risks and understanding their nature in the context of the operation at hand. Identifying hazards is crucial because it sets the foundation for the subsequent steps of ORM, which involve assessing the risks, developing controls, and making informed decisions regarding risk management strategies. Identifying hazards means thoroughly examining the environment and activities to pinpoint elements or situations that could lead to accidents or adverse outcomes. Without this initial assessment, it would be impossible to effectively manage risks, as you would lack a clear understanding of what you need to mitigate. This proactive approach ensures that all potential dangers are considered before moving forward with any operational planning. Assessing, implementing controls, and making risk decisions are all subsequent steps that rely on the thorough and accurate identification of hazards to inform their effectiveness and relevance. By focusing on clear identification first, organizations can later develop tailored strategies aimed at managing the identified risks efficiently.

The first step of Operational Risk Management (ORM) is to identify hazards. This involves recognizing potential risks and understanding their nature in the context of the operation at hand. Identifying hazards is crucial because it sets the foundation for the subsequent steps of ORM, which involve assessing the risks, developing controls, and making informed decisions regarding risk management strategies.

Identifying hazards means thoroughly examining the environment and activities to pinpoint elements or situations that could lead to accidents or adverse outcomes. Without this initial assessment, it would be impossible to effectively manage risks, as you would lack a clear understanding of what you need to mitigate. This proactive approach ensures that all potential dangers are considered before moving forward with any operational planning.

Assessing, implementing controls, and making risk decisions are all subsequent steps that rely on the thorough and accurate identification of hazards to inform their effectiveness and relevance. By focusing on clear identification first, organizations can later develop tailored strategies aimed at managing the identified risks efficiently.