ORX research programme: Q1-Q2 2019

  • 18 January 2019

We've just announced the research projects that we're launching in Q1-Q2 2019, including projects on operational risk framework design, the role and scope of operational risk, ICAAP methodology study and an RCSA practice benchmark.

Operational risk framework design

Understand how your operational risk framework compares to others within the industry. This study will present a range of practice and create a typical framework for reference. We will also attempt to cross reference the typical frameworks against the Principles for the Sound Management of Operational Risk (PSMOR), giving an indication of how the framework supports the essentials of sound risk management.

Role and scope of operational risk

This study will build on the 2018 operational risk umbrella project. It will collect information on the role that operational risk plays (with respect to three lines of defence) and the remit it has across operational and non-financial risks, in order to provide a robust assessment of industry practice.

ICAAP methodology study

This study will look at the range of methodologies employed by operational risk to meet their ICAAP requirements. As the ICAAP requirement is variable across jurisdictions, a large focus of the study will be to understand these differences and provide valuable benchmarking by jurisdiction.

RCSA practice benchmark

Risk Control Self-Assessment (RCSA) is an integral element of a firm’s overall operational risk management and control framework. As part of our practice benchmarking offer, we will be carrying out a study looking at the range of practice across the industry. We will be providing the opportunity for you to compare yourself with your peers, as well as an understanding of the industry’s direction of travel.

Further development of the industry operational risk taxonomy

Following initial work published in 2018, ORX will continue to develop an industry operational risk taxonomy. In 2019, initial work will focus on providing further guidance to support the 2018 version. Further developments will then focus on building more granularity into the taxonomy (such as level 2s for each category), testing and using this with ORX data and providing supporting guidance so it can be used by members. We will create a community of engaged members to support the direction and development of the taxonomy, as well as to help ensure the taxonomy becomes an asset to the industry.

Text-mining of event descriptions

A great deal of valuable information is contained within historical operational risk event description data. This project will attempt to automatically extract this information by applying machine learning techniques to event data collected at an industry level. The project will aim to explore the identification of root causes and automated categorisation, among other ideas.

Other work

In addition to these projects, we'll also be conducting a thought leadership study on the future of operational risk measurement, projects for our scenario community, and continuing our regular work with our working groups.

Throughout 2019, we'll announce other projects – including more practice benchmarks, further thought leadership studies, and work focusing on risk measurement. If you'd like to know more about our planned research, please contact us.

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