Roland Kennet

7/28/2019 Roland Kennet

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ORX and the Operational Risk Process

3rd FEBRABAN International Operational RiskConference

Sao Paulo

12th -14th May 2010

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Agenda

ORX

Reports

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ORX

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What is ORX?

A not-for-profit industry association headquartered in

urc , w zeran

Founded primarily as a platform for securelysharing high quality operational risk loss data

members to:

develo o erational risk mana ement ractice set common standards for the industry develop professional networks

ORX seeks to advance operational risk management

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ORX Global Membership Strong

ABN Amro

Banc Sabadell

Cajamar

Capital One

Morgan Stanley

National Australia Bank

anco ao zcaya rgen ar a

Banco Pastor

Banco PopularBanco Portugus de Negcios,

Commerzbank AG

CBA

Credit AgricoleDanske Bank A/S

Northern Trust

PNC

PostbankRabobank

Bank Austria Creditanstalt

Bank of America

Bank of Ireland

Deutsche Bank AG

Dresdner Bank AG

Erste Bank

Royal Bank of Canada

Royal Bank of Scotland

RZB

an o ew or e on

Bank of Nova Scotia

Barclays Bank

BMO Financial Grou

Euroclear Bank

First Rand

Fortis

Fortis NL

Santander

Skandinaviska Enskilda Banken

Standard Chartered

State Street

BNP Paribas

Bradesco

Caja Laboral

Grupo Banesto

HSBC

ING

Societe Generale

TD Bank Financial Group

US BancorpCaixa Catalunya

Caixanova

Intesa SanPaolo

JPMorgan Chase

Lloyds Banking Group

Wells Fargo

WestLB

Westpac

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Why do Members Need ORX Loss

Data? Fundamental value of external loss data is that it

offers a larger sample than your own experience

an s can an o ncorpora e ex erna oss a a

To su lement internal data in uantitative models

Inform scenario analysis

Benchmark performance relative to peers

Validate the adequacy of internal data and capital

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What Data Is Shared?

Loss Data

Event Type

Dates Occurrence, Discovery, Recognition

Recoveries Direct and Indirect

Gross Income

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ORX Core Values

Data Quality

Not for Profit

Equality

Member Value

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Member Value

Data

Analytics

ORX Club

Working Groups

Industry Influence

Regional Chapters

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ORX and Re ional Data

ORX alread o erates multi le database for variousmembership groups:

Global Banking Loss Database

Spanish National Loss Database

Canadian National Loss Database

ORX is looking to actively develop additional

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SHARING REGIONAL DATA

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Re ional Data

Unique

Legal Basis

Business Practices Business Activities

Business Size

Culture Flexible

Data Shared

Thresholds Exposure Indicators

Focussed

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Data Quality

Who Participates

Rigorous Standards

Give to Get

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Data Confidentialit

A lication Securit

Infrastructure Security

Data Access

Critical Mass test

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Data Ownershi & Anal sis

Who owns the data?

Raw data

Anonimised Data

Analysis

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REPORTS

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Total Number and Value of Losses

Total Number and Value of Losses by Last 6 Quarters

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Loss Events Frequency (2002-2008)

Employment

Practices &

Clients,

Products &

Technology

&

Execution,

Del iver &

Internal

Fraud

External

Fraud

Workplace

Safety

Business

Practices

Disasters &

Public Safety

Infrastructure

Failures

Process

Management

Malicious

Damage Total

% of

Total

Corporate Finance 21 112 141 308 1 5 330 0 918 0.74% , , .

Retail Banking 4,153 39,725 8,101 7,822 844 1,201 16,279 194 78,319 63.16%

Commercial Banking 185 4,207 393 1,669 59 261 4,440 1 11,215 9.04%

Clearing 52 530 123 105 3 156 1,768 0 2,737 2.21%

Agen cy Services 16 55 96 159 5 61 2,412 0 2,804 2.26%

Asset Management 52 110 141 586 10 76 2,206 1 3,182 2.57%

Retail Brokerage 209 161 515 1,856 10 55 1,222 1 4,029 3.25%

Private Bankin , , , .

Corporate Items 34 301 667 315 215 76 974 10 2,592 2.09%

Total 4,969 45,883 10,743 15,006 1,190 2,627 43,373 209 124,000

% of Total 4.01% 37.00% 8.66% 12.10% 0.96% 2.12% 34.98% 0.17%

1%5% 5%10% >10%

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Loss Events Severit 2002-2008

Internal

Fraud

External

Fraud

Practices &

Workplace

Safety

,

Products &

Business

Practices

Disasters &

Public Safety

&

Infrastructure

Failures

,

Delivery &

Process

Management

Malicious

Damage Total

% of

Total

orpora e nance 2 21 22 47 0 1 78 0 171 0.59%

Trading & Sales 12 218 77 113 1 167 3,086 0 3,674 12.60%

Retail Banking 660 11,274 1,026 1,215 145 274 3,771 80 18,445 63.26%

, , .

Clearing 10 103 7 12 0 32 295 0 459 1.57%

Agen cy Services 2 36 16 28 1 20 852 0 955 3.28%

Asset Mana ement 4 6 24 105 0 8 508 0 655 2.25%

Retail Brokerage 34 56 37 197 2 18 323 0 667 2.29%

Private Banking 43 70 26 248 0 21 752 0 1,160 3.98%

Corporate Items 7 156 96 34 31 18 173 3 518 1.78%Total 802 13,002 1,378 2,338 203 611 10,742 83 29,159

% of Total 2.75% 44.59% 4.73% 8.02% 0.70% 2.10% 36.84% 0.28%

1%5% 5%10% >10%

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Business Line Ranking

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Documents

Roland Kennet