One of the major challenges for a large number of firms at the present time is dealing with the changing requirements of risk management.

It was noted by Global Financial Markets Intelligence (GFMI) that these activities have evolved from simple calculations of capital requirements to requirements for a proactive, holistic approach. This helps ensure that managers can maintain their organisation's profitability and reputation.

This is something that should be in the front of businesses' plans at the current time, as recent financial scandals have shown that failing to manage risk can result in huge losses that firms may never recover from.

Ger Jan Meijer, director of operational risk management for Citco Fund Services, explained there are several key steps that professionals must undergo if they are to successfully develop a holistic approach to risk governance.

He said: "Companies need to take risks to create value and manage risks to protect value. The challenge is to find and keep a good balance between risk and reward in a fast-changing and increasingly complex environment."

Mr Meijer, who will be giving an address on operational risk at the GFMI Proactive Operational Risk Management Conference in New York next month, said one of the most commonly-overlooked aspects that result in a lack of understanding of risks is a 'silo' mentality. This leads to individuals focusing only on parts of the businesses that directly affect them, which therefore means they do not understand the full processes and interdependencies of their operations.

This is exactly why a holistic approach is important, the expert said. To achieve this, professionals will need to develop an organisational-wide view of risk, including what the appetite for this is in various departments.

Having a single, unified governance and compliance framework for the identification, assessment and mitigation of risks is also a must, as is producing robust policies and systems that can manage challenges across multiple business units.

"It is not easy to objectively measure the added value of an effective operational risk management program," Mr Meijer explained. However, he added understanding certain statistics and trends can provide added value and drive the success of an effective operational risk management solution.