OPERATIONAL RISK MANAGEMENT GOVERNANCE
- As outlined in section 1, as part of the overall responsibilities of the Board of Directors, an oversight on the operational risk profile of the organisation is also included. The nature and intensity of Board oversight may differ from organisation to organisation, depending on its constitution, any specific requirements from a regulatory angle, the industry and the nature of business etc.
- For banks it is mandatory to have an Operational Risk policy approved by the Board, and the RBI guidelines have clearly described roles and responsibilities of the ORM Committee, the Chief Risk Officer and other roles that are expected to engage in the implementation of the framework.
- For other industries where a Board approved policy may not be mandatory as per regulatory environment, it is still strongly advisable to have a comprehensive policy documenting the governance mechanism of operational risk.
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