What is a vital first step in the ORM process?

Identifying hazards and risks is indeed a vital first step in the Operational Risk Management (ORM) process. This step is crucial because it sets the foundation for the entire ORM framework. By identifying hazards, individuals and teams can gain insight into potential issues that could arise during operations, which allows for proactive measures to be taken.

Understanding the specific hazards allows for a thorough assessment of associated risks, including the likelihood and severity of potential consequences. This initial identification is essential for informed decision-making and effective risk mitigation. Once hazards have been identified, a clearer picture of the operational landscape emerges, facilitating the implementation of controls, risk assessments, and other necessary management strategies.

In contrast, actions such as implementing controls immediately or evaluating financial impacts come after the risks have been identified. Training only managers falls short because effective ORM involves all personnel, not just management, to ensure a comprehensive risk management culture is fostered across the organization. Thus, identifying hazards and risks serves as the critical first step in ensuring safety and operational effectiveness.