KNOWLEDGE AND LEARNING IN TERMS OF OPERATIONAL RISK MANAGEMENT IN THE FINANCIAL AND BANKING SYSTEMS

This paper is a part of the author`s wider research that examines the impact of operational risks on the functioning of financial organisations, with particular reference to central banks. The research clearly demonstrates the importance of the human factor in the timely identification and efficient management of operational risks. People are the basic strength of organisations; they are the source of innovation, as well as of good relations with customers and other interested parties. The paper highlights the illusion that people can be successful in improving products or providing better services without improving themselves as well. Any assessment of the impact of the human factor on the appearance, identification, and efficient management of operational risks is a very complex process. This has to be an ongoing process that develops through the development of the organisation, staff competences and motivation, as well as organisational culture. In particular, emphasis must be placed on the importance of learning and knowledge in both the recognition and the efficient management of operational risks. The paper identifies education as the foundation of knowledge and knowledge as the foundation of the long-term development of organisations. They grow in significance when employing a process approach to risk management, especially the connected roles of ?process owners? and ?risk owners? in effective process and risk management. It is also clearly shown that any defence against risk, is as strong as its weakest link, and the weakest link in the chain of defence is an untrained, demotivated or dissatisfied employee or team, who are unable to recognize risk on time.