In late 2018, the Operational Riskdata eXchange Association (ORX) launched its level 1 operational risk/non-financial risk (NFR) reference taxonomy. Subsequently, members and the wider industry expressed a lot of interest in expanding the taxonomy to go deeper into level 2 risks. Accordingly, ORX has begun a project to create an updated industry reference taxonomy.
Over the next few months ORX will develop:
Furthermore, ORX will also consider how the taxonomy is used in their existing information services, with a particular focus on supporting the active management of material risks.
How will the completed taxonomy help the industry? To begin, the industry can leverage the enhanced taxonomy as a reference. In addition, the taxonomy will offer a shared understanding of the key operational risks organizations face today. The enhanced taxonomy will also help the industry to manage material risks that in many cases are relatively difficult to control with the Basel Event Types.
As a first step, ORX will analyze the taxonomies received from more than 50 member firms, which include some of the world's leading banks and insurers. ORX will leverage advanced analytics/machine learning and similar innovative techniques and technologies to create an initial level 1 and level 2 taxonomy. At this stage, accompanying guidance and Deep Dives would be developed.
Once an initial draft has been developed, a group of experts from member firms and an external consultant would review the taxonomy, guidance and the Deep Dives. They would also suggest enhancements. The aim is to complete and publish an enhanced reference taxonomy by early October.
Click here to read the original article published on the ORX website.
Please give your feedback on this article or share a similar story for publishing by clicking here.
