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5 Best Practices for Operational Risk Management

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Managing risk prevents procedural failures from becoming tangible losses, like regulatory fines, penalties, and reputational loss. Operational risk management (ORM) protects your organization from potential threats and lessens the impact of an event, should one occur. This process involves detecting, analyzing, and mitigating risks, along with improving outcomes through better decisions. 

Since risk is an inherent part of doing business, and human error is unavoidable, it’s necessary to have a strong operational risk management strategy. 

Here are the 5 best practices for managing operational risk in your company.

  1. Use risk management software

Workiva highlights how an operational risk management tool is the first thing you need to successfully manage risk. It can be extremely difficult to thoroughly assess and mitigate risk manually because there are far too many nuances and details to track. Plus, some tools provide automation to support your needs. The right tool will provide you with a plethora of financial reporting options, compliance integrations, and will connect your data from multiple sources to make your risk-based decisions more accurate.

These days, manual data management is nearly impossible. When it comes to key risk indicators (KRIs), you can’t afford to make mistakes. By using an operational risk management tool, you’ll reduce preventable oversights and mistakes, which will help you better manage risk.

  1. Accept risk only when the benefits outweigh the potential cost

Unnecessary risks don’t provide significant value to a goal. It’s never a good idea to take on unnecessary risk because the cost can be devastating. Unfortunately, many people, especially entrepreneurs, have a personal bias that distorts judgment and limits critical analysis. 

What makes a risk unnecessary? It’s not the level of the risk that determines whether it’s worth taking, but rather, the potential benefits. Your organization might be fine taking on high risk if the benefits will outweigh the cost, both financially and otherwise.

Regardless, all major risks should be cleared by senior management and stakeholders first.

  1. Address risk at the appropriate level

Decisions will be made at every level across your organization, so make sure risk decisions are made by the right people. For instance, employees shouldn’t be making decisions that have the potential to seriously impact the company, and managers need to ensure their employees have a strong understanding regarding how much risk they can bear and when to escalate a situation to a higher-up.

  1. Plan ahead for remediation

Part of operational risk management involves planning. The decision makers in your organization should be incorporating ORM into business processes, which requires time and resources. However, this should be part of every planning and execution phase.

  1. Categorize and prioritize your risks

You’ll need to categorize and prioritize your risks to get a good idea of what actions you should take and decisions you should make. This is done with a control matrix in five basic steps:

  • Identify your risks before conducting your assessments
  • Measure risk probability
  • Assess the potential impact
  • Calculate total risk
  • Update your control matrix accordingly

Within your risk control matrix, you’ll be prioritizing risks from the following categories: 

  • People risk. These are risks caused by people and human resources management. For example, hiring the wrong people, improper training, unmotivated team members, and high turnover rates often result in errors, fraud, and other ethical actions that can harm your organization.

  • Systems risk. When internal systems fail, losses can be devastating. This can include the loss of backups, downtime for networks, and other technical errors.

  • Process risk. When internal business processes are inadequate, your business can suffer. This includes things like product design flaws and failure to meet project deadlines or deliver projects to a client’s specifications.

  • External events risk. These risks are out of your control, like storms, floods, hurricanes, fires, and even manmade problems like robberies, terrorist attacks, and wars.

  • Legal compliance risk. When your business fails to comply with internal and external compliance regulations, the risks are great. These issues often involve tax and financial accounting regulations, internal ethical codes of conduct, and any other regulations imposed by a regulatory body governing your industry.

Operational risk management is critical for success

There are many ways to make a business successful, but if you don’t manage risk, one error or incident can tear down all your hard work. The best way to manage risk is to avoid it whenever possible. However, you can’t avoid all risk, and that’s where strategic risk management comes into play. Choose the risk you’re willing to accept, mitigate the potential consequences, and continue fine-tuning your decision-making process to respond better to similar risks in the future.

The idea of Bigtime Daily landed this engineer cum journalist from a multi-national company to the digital avenue. Matthew brought life to this idea and rendered all that was necessary to create an interactive and attractive platform for the readers. Apart from managing the platform, he also contributes his expertise in business niche.

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Business

VPNRanks Report Uncovers User Discontent with Majority of VPN Services

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A groundbreaking report by VPNRanks reveals significant user dissatisfaction with the majority of VPN services, showing that 89% of VPNs globally fail to meet user satisfaction standards. This revelation comes at a critical time when digital security is paramount, and the demand for reliable VPN services continues to rise.

The Importance of User Satisfaction in the VPN industry

According to industry statistics from Global Market Insights, the global VPN market size was valued at USD 45 billion in 2022 and is estimated to grow at a compound annual growth rate (CAGR) of around 20% from 2023 to 2032. Driven by the growing instances of cybercrimes and data thefts, coupled with the increasing proliferation of wireless devices and digital infrastructures across industries, user satisfaction remains a critical challenge for many providers. High user satisfaction is essential for customer retention, brand reputation, and long-term success in the competitive VPN market.

“User satisfaction is the cornerstone of success in the VPN industry. In a market flooded with options, it’s the real user experiences that set the leading providers apart. VPNScore helps users navigate this complex landscape by highlighting services that excel in meeting user expectations,” said Muhammad Saleem Ahrar, COO of webAffinity, the team behind VPNRanks.

VPNRanks is a leading VPN review platform that leverages sentiment analysis to provide comprehensive and unbiased reviews of VPN services. Its VPNScore is based on an AI-driven analysis of publicly available user reviews. The platform aims to simplify the process of identifying the best VPN provider tailored to each user’s unique needs.

VPNRanks Untangles Complex Findings on Key Features

VPNRanks evaluated four key features — ease of use, ease of setup, ability to meet user requirements, and quality of support — to identify the VPN companies that excel at customer satisfaction. To determine a final rank for each metric, VPNRanks combined a popularity score, which contributed 20 percent of the total, with a satisfaction score, which contributed 80 percent.

The study sifted through reviews on 93 paid VPN companies to determine the top providers. The VPNRanks report, issued in June 2024, provides rankings for each key feature and overall customer satisfaction. ExpressVPN achieved the top VPNScore — 6.29 out of 10 — for overall satisfaction globally. The next four top companies in that category, listed in descending order, are PureVPN, NordVPN, PrivateVPN, and Surfshark.

By assessing a variety of categories, the VPNRanks study reveals the challenges users face when trying to identify the best option to meet their needs. For example, NordVPN received a nearly perfect popularity score of 9.46 out of 10 but only a 4.7 satisfaction score. PrivateVPN received a satisfaction score of 6.69 out of 10, which rivaled ExpressVPN’s score in that category, but received a popularity score of only 1.23 out of 10.

The global rankings for ease of use illustrate how challenging identifying a quality provider can be. VeePN received a very high satisfaction score of 7.18 out of 10 while receiving a popularity score of less than 1 out of 10. The findings reveal a gap between user experience and market penetration that can effectively keep the best option hidden from the consumer.

The VPNRanks report gives users insight into satisfaction and popularity while providing a balanced assessment via its VPNScore. “Users should choose based on their priorities, whether it’s user satisfaction, market presence, or a balanced option,” the report states.

VPNRanks Shows Providers How to Become More Competitive

In addition to serving as a guide for consumers, VPNRanks also maps out a pathway for VPN providers seeking greater market share. The VPN providers that consistently appear in the top spots on the VPNRanks charts are those that have achieved a balance between popularity and user satisfaction. Those who neglect one or the other cannot keep pace with market leaders.

The report explains that those with high satisfaction scores but low popularity “might be well-loved by their users but need to increase their market visibility to compete more effectively.” Achieving overall success in the VPN market requires balancing user satisfaction with market presence, it advises.

Conclusion

As the need for VPN services continues to grow, businesses can expect to see more providers enter the market, making the task of identifying the best option more difficult. The insights VPNRanks provides stand as a timely beacon, guiding users to providers who can satisfy their needs and support their operations.

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