roland kennet
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ORX and the Operational Risk Process
3rd FEBRABAN International Operational RiskConference
Sao Paulo
12th -14th May 2010
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Agenda
ORX
Reports
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ORX
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What is ORX?
A not-for-profit industry association headquartered in
urc , w zeran
Founded primarily as a platform for securelysharing high quality operational risk loss data
members to:
develo o erational risk mana ement ractice set common standards for the industry develop professional networks
ORX seeks to advance operational risk management
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ORX Global Membership Strong
ABN Amro
Banc Sabadell
Cajamar
Capital One
Morgan Stanley
National Australia Bank
anco ao zcaya rgen ar a
Banco Pastor
Banco PopularBanco Portugus de Negcios,
Commerzbank AG
CBA
Credit AgricoleDanske Bank A/S
Northern Trust
PNC
PostbankRabobank
Bank Austria Creditanstalt
Bank of America
Bank of Ireland
Deutsche Bank AG
Dresdner Bank AG
Erste Bank
Royal Bank of Canada
Royal Bank of Scotland
RZB
an o ew or e on
Bank of Nova Scotia
Barclays Bank
BMO Financial Grou
Euroclear Bank
First Rand
Fortis
Fortis NL
Santander
Skandinaviska Enskilda Banken
Standard Chartered
State Street
BNP Paribas
Bradesco
Caja Laboral
Grupo Banesto
HSBC
ING
Societe Generale
TD Bank Financial Group
US BancorpCaixa Catalunya
Caixanova
Intesa SanPaolo
JPMorgan Chase
Lloyds Banking Group
Wells Fargo
WestLB
Westpac
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Why do Members Need ORX Loss
Data? Fundamental value of external loss data is that it
offers a larger sample than your own experience
an s can an o ncorpora e ex erna oss a a
To su lement internal data in uantitative models
Inform scenario analysis
Benchmark performance relative to peers
Validate the adequacy of internal data and capital
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What Data Is Shared?
Loss Data
Event Type
Dates Occurrence, Discovery, Recognition
Recoveries Direct and Indirect
Gross Income
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ORX Core Values
Data Quality
Not for Profit
Equality
Member Value
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Member Value
Data
Analytics
ORX Club
Working Groups
Industry Influence
Regional Chapters
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ORX and Re ional Data
ORX alread o erates multi le database for variousmembership groups:
Global Banking Loss Database
Spanish National Loss Database
Canadian National Loss Database
ORX is looking to actively develop additional
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SHARING REGIONAL DATA
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Re ional Data
Unique
Legal Basis
Business Practices Business Activities
Business Size
Culture Flexible
Data Shared
Thresholds Exposure Indicators
Focussed
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Data Quality
Who Participates
Rigorous Standards
Give to Get
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Data Confidentialit
A lication Securit
Infrastructure Security
Data Access
Critical Mass test
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Data Ownershi & Anal sis
Who owns the data?
Raw data
Anonimised Data
Analysis
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REPORTS
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Total Number and Value of Losses
Total Number and Value of Losses by Last 6 Quarters
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Loss Events Frequency (2002-2008)
Employment
Practices &
Clients,
Products &
Technology
&
Execution,
Del iver &
Internal
Fraud
External
Fraud
Workplace
Safety
Business
Practices
Disasters &
Public Safety
Infrastructure
Failures
Process
Management
Malicious
Damage Total
% of
Total
Corporate Finance 21 112 141 308 1 5 330 0 918 0.74% , , .
Retail Banking 4,153 39,725 8,101 7,822 844 1,201 16,279 194 78,319 63.16%
Commercial Banking 185 4,207 393 1,669 59 261 4,440 1 11,215 9.04%
Clearing 52 530 123 105 3 156 1,768 0 2,737 2.21%
Agen cy Services 16 55 96 159 5 61 2,412 0 2,804 2.26%
Asset Management 52 110 141 586 10 76 2,206 1 3,182 2.57%
Retail Brokerage 209 161 515 1,856 10 55 1,222 1 4,029 3.25%
Private Bankin , , , .
Corporate Items 34 301 667 315 215 76 974 10 2,592 2.09%
Total 4,969 45,883 10,743 15,006 1,190 2,627 43,373 209 124,000
% of Total 4.01% 37.00% 8.66% 12.10% 0.96% 2.12% 34.98% 0.17%
1%5% 5%10% >10%
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Loss Events Severit 2002-2008
Internal
Fraud
External
Fraud
Practices &
Workplace
Safety
,
Products &
Business
Practices
Disasters &
Public Safety
&
Infrastructure
Failures
,
Delivery &
Process
Management
Malicious
Damage Total
% of
Total
orpora e nance 2 21 22 47 0 1 78 0 171 0.59%
Trading & Sales 12 218 77 113 1 167 3,086 0 3,674 12.60%
Retail Banking 660 11,274 1,026 1,215 145 274 3,771 80 18,445 63.26%
, , .
Clearing 10 103 7 12 0 32 295 0 459 1.57%
Agen cy Services 2 36 16 28 1 20 852 0 955 3.28%
Asset Mana ement 4 6 24 105 0 8 508 0 655 2.25%
Retail Brokerage 34 56 37 197 2 18 323 0 667 2.29%
Private Banking 43 70 26 248 0 21 752 0 1,160 3.98%
Corporate Items 7 156 96 34 31 18 173 3 518 1.78%Total 802 13,002 1,378 2,338 203 611 10,742 83 29,159
% of Total 2.75% 44.59% 4.73% 8.02% 0.70% 2.10% 36.84% 0.28%
1%5% 5%10% >10%
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Business Line Ranking
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