We've updated the ORX Operational Risk Reference Risk Taxonomy guidance to provide clarification on areas highlighted by firms following survey feedback.
In November last year, we published the results of the ORX Reference Risk Taxonomy survey in which over 60 members across the financial services industry shared their experience of using the ORX Reference Risk Taxonomy which incorporates the Event Type Reference Taxonomy and the Cause and Impact Taxonomy.
The feedback indicated the ORX Reference Operational Risk Taxonomy is being adopted or considered as a standard across the financial industry, with members reporting it as saving them time and money in implementing their own taxonomies, and commenting on its value as an industry benchmark.
Updated taxonomy guidance
In substantially positive feedback, almost 70% of respondent firms said that they would like the ORX Event Type Taxonomy incorporated into ORX loss data sharing services, and almost 60% of respondents said they would be ready to start submitting loss data to ORX on this basis during the next two years.
With our future aim to incorporate the taxonomy into the ORX loss data exchange services, and to support our members in these areas, ORX has republished the Event Type Reference Taxonomy with additional guidance on:
- Third party/vendor fraud
- Rogue trading
- Climate risk
- Transformation risk
- Strategic Risk
- Resilience theme
- Artificial Intelligence and Machine Learning
- Control failures and boundary risks
- Use in conjunction with the Cause and Impact Taxonomy
- Third party failure
Looking to the future: incorporation into loss data exchange
This year, working with our members we'll begin the journey to review the ORX loss data services, including the types of data we exchange; many members would like to see the more contemporary ORX Event Type Taxonomy incorporated, and we believe this would help provide more value from the data, particularly through the ability to analyse risk trends, emerging issues and make comparisons with other ORX data, such as ORX News, ORX Scenarios and the ORX Reference Control Library.