Op risk losses reported by global insurance companies continue to fall

  • 21 July 2022

Our latest Annual Insurance Operational Risk Loss Data report reveals a decline in total gross loss across the insurance community. This is despite the challenging environment created by both external threats, including geopolitics, cyber risk, the economy, and internal developments, particularly as the industry moves to digitalise.    

Trends and analysis from the op risk loss data 

In 2021, 1,155 operational risk loss events were submitted totalling €522.8m in gross loss.  

This year’s report trends reveal: 

  • Lower total gross loss – With the exception of 2020, total gross loss has remained reasonably steady year on year since 2018. There was a significant spike in 2020 at €1.2bn due in part to coronavirus related losses, while 2021 saw the lowest gross loss since 2017. The average annual gross loss from 2016-2021 is €752m. 

  • Total number of events reduces slightly – The annual loss frequency was slightly lower in 2021 than the average for 2016-2021, with 326 fewer loss events submitted than in the previous year. 

  • Size of average risk loss event - The average size of an operational risk loss event in 2021 was €452,607. In 2020 the average size of a loss was almost double this at €823,232 due in part to large coronavirus losses as well as large events classified as “Transaction, Capture Execution and Maintenance” which includes losses due to poor execution of regular business tasks for example accounting and data entry errors. 

  • Percentage of total gross loss by top ten largest loss events - Over the last six years, the percentage of the top ten largest loss events ranged between 33-41% of total gross loss. In 2021 the ten largest losses accounted for €216m, or 41% of total gross loss. This was the largest proportion of top ten losses in the last six years. 

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The Life business line experienced the largest proportion of total gross loss in 2021 (41%), whilst Non-Life business lines incurred 39%, Corporate level losses 17% and asset management with 4% of the total gross loss.  

Steve Bishop, Research & Information Director at ORX comments: 

“This year we’ve seen a significant reduction in gross loss. Given the levels of change facing global insurance and the turbulent external environment, it will be interesting to see if the reduction continues through 2022. 

“Next year’s results could well reflect a number of factors, including the impact from the Ukraine conflict, losses related to the increasing cyber security threat and to economic turbulence, in particular arising from supplier issues, conduct or external fraud.” 

Coronavirus pandemic 

The onset of the pandemic has altered the operational risk landscape and the risk profiles of financial institutions.   

ORX began tagging coronavirus related losses in 2020 and since then 59% of ORX insurance members have submitted related loss events with a total event gross loss of €362.6m. 36 coronavirus events were reported during the period to end 2021 with a mean loss size of €10m. 

The latest report from ORX shows that losses tailed off as the world has returned to a more normal state and longer-term changes required have become part of business as usual (e.g., changes to the workplace and supporting a hybrid working environment). 


Conduct risk 

In 2021, conduct risk remains a key concern for insurers and an area of strong regulatory focus, not least because this risk type can cause large losses to financial institutions.  

199 conduct events were reported in 2021, amounting to €182.6m gross loss.  

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Become a member of ORX to access loss data 

With ORX Membership, financial firms can anonymously and confidentially share operational risk data, gaining access to our global loss database. Firms can then use the database to benchmark themselves and perform analysis. 

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