What is ORM Full Form in Banking?
The ORM full form in Banking is Operational Risk Management. Operational risk management is the process of detecting, assessing, and managing risks connected with a financial institution’s operations. These risks might emerge from internal procedures, people, systems, or external events, and they have the potential to jeopardize the bank’s financial health, reputation, and regulatory compliance. Effective ORM strives to reduce the likelihood and severity of operational failures by implementing proactive risk management tactics and procedures.
Key Components of ORM:
The key components of ORM in banking are risk identification, assessment of risk, risk monitoring and implementing risk mitigation strategies. Establishing protocols and procedures for responding to and controlling operational incidents, including escalation procedures and corrective actions are also included in operational risk management in the banking sector.
Importance of ORM in Banking:
Effective ORM contributes to financial stability by reducing losses from operational failures and disruptions. Managing operational risks helps the bank maintain its reputation and credibility with customers, investors, and regulators. It ensured that regulatory requirements and industry standards are met through effective risk management procedures. As it involves in proactive risk management, it reduces operating costs associated with events and disruptions.
