ORX publishes Cause and Impact Taxonomy
- 25 November 2020
We've delighted to announce that we've extended the ORX Operational Risk Reference Taxonomy to include a new Cause and Impact Taxonomy. The new taxonomy, which was published on 24 November 2020, complements ORX Event Type Taxonomy which was released last year.
Creating a taxonomy for today's risk landscape
Since 2018, ORX has been working on creating a taxonomy for operational and non-financial risk which reflects the environment that we are working in today. To do this, we need a taxonomy that includes more 'contemporary' risks – such as cyber and conduct – while not moving completely away from the Basel Event categories.
Our work so far has been well received and recognised by the operational risk industry, with our initial groundwork winning initiative of the year at the 2019 Operational Risk Awards and the Event Type Taxonomy having been downloaded over 2,000 times since it was launched.
After publishing the Event Type Taxonomy, it became clear to us that an additional taxonomy, focusing on cause and impact categories would support the industry further and help them use the taxonomy. So, in 2020 we worked with Oliver Wyman (who also supported us with the Event Type Taxonomy) to create the Cause and Impact Taxonomy.
Using information from financial firms around the world
Thanks to our position as a membership association, we were able to bring together information and experts from a range of financial organisations worldwide to develop the new taxonomy. Using data from our member firms as the key input, we've developed reference cause and impact categories to level 2. The Cause and Impact Taxonomy provides definitions and examples to support understanding of the cause and impact categories, while the accompanying guidance helps financial organisations better understand how to use it.
"The ORX taxonomy has the potential to benefit the entire industry. By covering causes and impacts, this new extended version allows firms to add crucial context to their data. This extra information will help improve the industry’s understanding of the operational risk environment.”
Luke Carrivick, Director of Research & Information, ORX
Download the ORX Reference Taxonomy
Together, the Cause and Impact and Event Type Taxonomies will provide operational risk teams with a practical resource to support the management of operational risk.