CIO | If IT's a Crapshoot: How Much Are You Willing to Risk?: "
Sue Bushell, CIO
There's a common thread that runs through the 1984 Bhopal chemical factory disaster, the rogue trading of Nick Leeson a year later, the collapses of Ansett in 2001 and HIH in 2002, and the mass recall that recently engulfed Pan Pharmaceuticals.
No, it is not just they all made it to the top of national news agendas and stayed there for weeks or months as the reputations of the affected companies got serially hammered. They are also all stark examples of gross failures in operational risk management.
The notion of operations risk has had currency since the Committee of Sponsoring Organisations of the Treadway Commission (COSO) coined the term in 1991. Nick Leeson kicked it along in spectacular manner after his rogue trading activities caused the collapse of Barings Bank, and he has been a poster boy for advocates of operational risk management ever since. But now CIOs in a range of industries are being forced to take operations risk seriously, pushed along by the June 1999 reforms of the Basel Committee on Banking Supervision requiring banks to reserve capital to cover their operational risk exposure and fostered by the new sense of vulnerability exposed by the September 11, 2001 terrorist attacks on New York and Washington. "
