Survey insights indicate ORX Reference Taxonomy is being considered the industry standard
- 9 December 2022
A recent survey run by ORX, the world’s largest operational risk association, with our 100+ membership of leading financial institutions has revealed ORX Reference Taxonomy is now being considered the industry standard. It is also saving firms considerable time and cost in implementing their own risk taxonomies.
The survey responses showed the benefits of the ORX Reference Taxonomy as it is already being actively used by 80% of respondent firms. 40% have adopted all or significant components of the taxonomy in their own risk management practice which, considering it was originally intended as a reference, is a very positive outcome.
60% of respondents reported their taxonomy is already either mapped to the ORX risk taxonomy or stated it would be possible to map their internal taxonomy to ORX’s. An additional quarter of respondent firms have used it for benchmarking their own taxonomy.
Responses to the survey also highlighted the value of the ORX Reference Taxonomy as an industry benchmark, helping firms to maintain consistency, support their internal discussions, assist with the management of internal stakeholders and improve their own taxonomy.
Leaders from ORX’s membership of global top-tier financial institutions have commented on the survey:
"It provided a solid foundation for adoption in our organization. It also gave confidence to the organisation that it was the output of many brilliant minds in the industry....it cut down debates. While we did customise part of the taxonomy for our unique requirements, it really saved significant upfront effort.”
"It has been extremely valuable to demonstrate alignment to an industry benchmark (when having discussions with our colleagues) whilst also providing a trigger for us to review our internal taxonomy and challenge ourselves other any areas of misalignment."
"ORX clearly defines inclusions and exclusion as well as possible overlaps between the event types. Using the Risk Taxonomy has helped us clarify boundaries between different risks, which will enable improved data quality and insights.”
“ORX has already done the work for us, so we don’t have to.”
The ORX Reference Taxonomy is available for free to ORX members on our members only website or for non-member institutions to purchase.
About the ORX Reference Taxonomy
ORX launched its award-winning Event Type Reference Taxonomy in 2019, based on taxonomy data collected from over 60 members across the financial services industry. ORX followed this up in 2020 with a Cause and Impact Taxonomy. The objective was to design an event classification which reflected current practice and included the contemporary risks faced in financial services to create an industry reference taxonomy which moved beyond the Basel Event Types.
The ORX Event Type Reference Taxonomy was developed to reflect the operational and non-financial risks financial firms face today. The Event types are categorised into 16 Level 1 risk types, with 61 more supporting Level 2 risk types.
Simon Wills, Executive Director at ORX comments:
“Our strategic priority was to create a common point of reference for operational risk taxonomies, laying the foundations which allow industry debate and consistent industry sharing of insights and data going forward."
Steve Bishop, ORX Research and Information Director adds:
“Looking forward into 2023, working with members, ORX will begin the journey to review the ORX loss data services, including the types of data we exchange. A key message from this survey is many members would like to see the more contemporary ORX Reference Event Taxonomy incorporated. We believe this would help provide more value from the data, particularly through the ability to analyse risk trends, review emerging issues and make comparisons with other ORX data, such as ORX News and ORX Scenarios.”
How to access the ORX Reference Taxonomy
ORX members can access the ORX Reference Taxonomy and full guidance on our member-only website for free. Or if you're not a member, you can download the taxonomy here.