The use of IT in mitigating operational risks in local financial institutions

Abstract

This study explores how information technology (IT) is being integrated and used with respect to Operational Risk Management (ORM), specifically within Maltese financial institutions. Due to increasing regulatory demands and the emergence of technologies such as artificial intelligence (AI) and cloud computing, this research explores how institutions in the industry are adopting and utilising IT. It investigates differences in IT adoption, effectiveness, and collaboration across institutions of varying sizes and resource capabilities. A qualitative approach was adopted, comprising of in-depth interviews with professionals in the Maltese financial sector, evaluating the effectiveness of current IT tools in ORM and identifying key challenges and barriers to implement IT-based solutions. The results revealed a heavy push towards IT integration which is most noticeably regulatory driven, although there were disparities in adoption noted based on the respective organisation’s size and resources. The study also mentions inconsistent effectiveness and performance measurement, and offers strategic recommendations to improve IT-enabled ORM, emphasising governance integration, IT literacy, and sector-wide collaboration. The research highlights the pivotal role of IT not only as a compliance tool but as a strategic enabler of resilience and innovation in modern risk governance.