Small is Beautiful in OpRisk Management

Ariane Chapelle

Small to medium-sized firms are not always clear on how to adjust the rules and regulations of operational risk management to suit their size and business model. But I would argue that, in matters of risk management, small is beautiful.

Smaller firms enjoy larger benefits from risk monitoring and mitigation due to lower co-ordination costs, more efficient internal communications and ease of access to the C-suite. In smaller firms, there is no need to spend days searching for the risk expert with the right information, or having to co-ordinate agendas for large meetings that are often postponed. And there aren’t – or shouldn’t be – many disparate risk tools and reports developed by different parts of the business. It’s clear that when it comes to size and risk management, the benefits of being small outweigh the benefits of being large (see table 3.1).

Every business and household manages its risk. Not all of us call it risk management, but we all act to protect our children from accidents; we all look after our belongings; and we all plan or save for the future. Risk management is an integral part of what we do and businesses are no exception.

Table 3.1: Advantages of small