Gross op risk losses fall despite geopolitical and regulatory uncertainty

POSTED BY ORX | 24 JULY 2025

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Operational risk losses reported by both banking and insurance organisations were substantially lower than the five-year average, as highlighted in the most recent annual loss data.

In insurance, gross operational risk losses in 2024 totalled €473 million. This figure is significantly below the five-year average of €761 million, which was notably elevated by Covid-19-related losses in 2020.

Meanwhile, in banking, members reported the lowest total gross operational risk loss in recent years, at €13.8bn, well below the previous five-year average of €23.8bn.

Member data in both banking and insurance shows that the decrease in reported losses is largely due to a reduction in conduct and transaction-related issues within Clients, Products and Business Practices (CPBP) and Execution and Delivery and Process Management (EDPM). The report suggests that this may be linked to the ongoing digitalisation trend within the sector.

Our report revealed that the reduction in operational risk losses, as described above, indicates a more resilient and proactive approach to managing operational risk.

Steve Bishop, Research and Information Director at ORX comments:

"While insights gathered from recent conversations with Chief Risk Officers and Operational Risk leaders point to heightened concern over the operational risk, our data has shown a reduction in actual losses.

This apparent discrepancy may suggest that greater awareness, improving risk management practices, and the introduction of digital processes are contributing to the effective mitigating of the most severe operational risks across the industry. This is positive news, especially at a time when we are seeing growing geopolitical and regulatory uncertainty."

Across both disciplines, not only has the value of losses fallen, so has the frequency of reported operational risk loss events. In our insurance loss data report, 2024 showed there was a 24% decrease compared to the average frequency over the previous five years. In banking, there was a 19% decrease in frequency in 2024 against 2019. The reduction in frequency may be attributed in part to the characteristics of operational risk events and their associated reporting requirements.

Across both banking and insurance, however, External Fraud events - described as ‘losses due to acts of a type intended to defraud, misappropriate property or circumvent the law, by a third-party’ have bucked the trend.

In banking, the number of losses from External Fraud have remained high (at 34,445 recorded in 2024), following an unprecedented peak in 2022 (39,651 reported). Although the occurrence of External Fraud events has increased, the overall losses (in terms of € value) have remained relatively stable except for an outlier in 2020 (€6.8bn), which was over double the mean recorded in the other five years (€2.9bn). These high rates are thought to be driven by high levels of losses in both North America and Africa. The regions with an increase in events have also reported an uptick in the days taken to detect these events. Low value, high-frequency fraud events, such as authorised push payment (APP) fraud, driven in part by social media and the continuing move to mobile banking applications.

Steve continued:

"We can assume that ongoing high levels of External Fraud in banking is linked to the rise of Information Security and Cyber Risks, with the growing threat of data theft and cyber incidents, which is ranked highest in the ORX Top Risk Review. What is perceived to be a growing threat is playing out in the loss data."

Access our comprehensive 2025 Annual Loss Reports for detailed analysis of industry trends

Our Annual Loss Reports provide a view of operational risk losses in 2024 compared to results from the previous five years based on data from our global banking loss database. Our banking, insurance and asset management reports are available for ORX members and ORX Lite subscribers.

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