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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

Private Listings by Harold X. Clarke: A New Approach to Fine Real Estate

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Photo credit: Private Listings by Harold X. Clarke.

Byline: Andi Stark

Private Listings by Harold X. Clarke, a real estate platform operating across Hawaii, is rewriting how properties are bought and sold in the region. Unlike larger firms reliant on public listings and mass marketing, Private Listings’ strategy prioritizes personalization, privacy, and meticulous curation of ultra-high-end, off-market properties, including oceanfront estates, gated community residences, and architectural masterpieces.

Harold Clarke, founder of Private Listings, describes their method as one that rejects “cookie-cutter solutions in favor of understanding the nuances of both buyers and sellers.” This approach has resonated with ultra-high-net-worth individuals (UHNWIs) seeking refined and discreet real estate transactions.

The Hawaiian real estate market remains a hub for global investors, with the median price for a single-family home in the state reaching $900,000 in 2024, according to the Hawaii Association of Realtors. Within this competitive landscape, Private Listings is building up to be a trusted name for properties that extend beyond luxury into generational investments.

Challenging the Industry Norms

Private Listings deliberately avoids the conventions of large-scale real estate firms. By focusing on fewer, higher-value properties, the company ensures that each transaction is treated with the same level of care and confidentiality.

Public listing platforms, while effective for broader markets, often expose sellers to unnecessary attention or unqualified inquiries. For Clarke, this model is misaligned with the needs of UHNWIs. “Privacy isn’t a luxury for our clients—it’s a necessity,” Clarke explains.

This philosophy has led Private Listings to handle some of Hawaii’s most significant real estate transactions, including off-market properties valued at over $40 million. Its success is not measured by the volume of listings but by the depth of trust built with clients, many of whom return for subsequent transactions.

Adapting to Changing Client Demands

While Private Listings maintains a foundation of traditional practices, the firm also recognizes the evolving needs of its clientele. The global real estate market is increasingly influenced by concerns over digital security, with a 15% rise in data breaches targeting high-net-worth individuals in the past three years, according to cybersecurity firm NortonLifeLock.

To address these risks, Private Listings employs rigorous screening for potential buyers and uses secure platforms for communication and transactions. The firm’s “by invitation only” model ensures that clients remain protected from the pitfalls of public exposure. Clarke notes, “Our goal is not just to sell homes but to create an environment where clients feel safe and confident during every step of the process.”

The Human Element in Real Estate Transactions

Despite advancements in technology, Private Listings firmly believes that real estate transactions cannot be reduced to algorithms or automation. Unlike firms that depend heavily on online data aggregation, Private Listings emphasizes human connection and insight.

The company’s sales strategy integrates personalized client interactions, in-depth market analysis, and years of experience navigating Hawaii’s unique real estate ecosystem. Clarke’s background in managing family assets and his global perspective is significant in shaping this essence.

Future Directions for Private Listings by Harold X. Clarke

As Hawaii continues to attract global attention, Private Listings aims to expand its influence within the state while maintaining its core principles. The company is currently developing a new platform to streamline services for UHNWIs, blending their demand for discretion with seamless access to Hawaii’s finest off-market properties.

Additionally, Private Listings is strengthening its ties with local communities, recognizing that sustainable growth benefits both the company and the islands’ ecosystems.

Private Listings by Harold X. Clarke has set itself apart in Hawaii’s real estate scene by moving away from the typical mass-market approach. Through a mix of traditional values and modern sensibilities, the firm continues to define what it means to transact ultra-high-value properties with integrity and care.

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