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OperationalRisk Landscape
H1 2014
Perspectives on the risk events thatcould affect your firm’s future
2nd Edition
Operational Risk Consortium Limited is a company registered inEngland and Wales with Company Number 05510364
Operational Risk Landscape Report
Welcome to our H1 2014 Operational
Risk Landscape report which provides
a unique insight into the loss profile
of the insurance industry.
3
Foreword The operational risk landscape for (re)insurers and
asset management companies has become arguably
more complex, more severe and difficult
to anticipate.
The 2nd edition of our Operational Risk Landscape
report provides a high level overview of the risk events submitted to
ORIC International in H1 2014 compared to the last 5 years. It highlights
the trends we’ve observed and provides a unique insight into the loss
profile of the industry for benchmarking purposes.
As the leading operational risk consortium for the (re)insurance and
asset management sector globally this report has been compiled using
the most complete industry reference on operational risk events.
Few (re)insurers and asset managers have sufficient internal risk event
data. Our members find the access they have to peer risk event data,
industry benchmarks and reference points extremely useful.
Therefore, we trust you’ll find the insights in this report a helpful
contribution in considering your approach to operational risk
management and measurement.
Best wishes,
Caroline Coombe
Chief Executive of ORIC International
Overview of Content This report provides an overview of trends in our consortium risk event
dataset covering:
About ORIC International . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Overview of Consortium Dataset . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Overview of 2011-H1 2014 Submissions . . . . . . . . . . . . . . . . . . . . . . . 7
Cumulative Frequency & Severity Distribution . . . . . . . . . . . . . . . . . . 8
Analysis of Near Misses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Losses by Business Function . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Analysis of Loss Events at Categorisation Levels 1 & 2 . . . . . . . . . . 11
Frequency Heat-maps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Severity Heat-maps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ORIC International and You: Stronger Together . . . . . . . . . . . . . . . . 14
The Operational Risk Landscape
4
ORIC InternationalFounded in 2005, ORIC International is the leading operational risk
consortium for the (re)insurance and asset management sector globally.
ORIC currently has 40 members with accelerating international growth.
ORIC is a not-for-profi t organisation dedicated to helping its members
enhance the capabilities of their operational risk functions. ORIC facilitates
the anonymised and confi dential exchange of operational risk intelligence
between member fi rms; providing a diverse, high quality pool of quantitative
and qualitative information on relevant operational risk exposures.
As well as providing operational risk event data, ORIC also provides
industry benchmarks, undertakes leading edge research, sets trusted
standards for operational risk and provides a forum for members to
exchange ideas and best practice. Our comprehensive offering is designed
to empower operational risk professionals to help the business and their
Board in the identifi cation, assessment, management/measurement,
monitoring and reporting of operational risk.
ORIC International ResourcesData Services
Consortium risk event data – Anonymised dataset of c. 7,000 peer risk events, the majority of which are not in the public domain
Scaling tool – Ability to scale consortium risk events to the size of your firm
Public risk event data – Dataset of over 16,500 risk events from the financial services sector which are in the public domain
Content Services ORIC scenario universe – 36 benchmark scenarios which your peers are using
Scenario library – 180+ insurance-specific detailed scenario specifications
KRI – 2,500+ detailed KRI specifications
Thought Leadership Scenario Analysis in Practice, 2014
Scaled Data Methodology, 2014
Creating Value from Risk Events, 2013
Scenario Benchmarking, 2012
Scenario Analysis Best Practice, 2010
Ongoing Research Initiatives
Community Quarterly Member Forums
Operational Risk Insurance Community “ORIC” LinkedIn group
Working Groups – for example Internal Model, Standard Formula
Discussion Groups
About ORIC International
5
Overview of Consortium Dataset
Total Number of Loss Events
Gross Loss (GBP millions)
Average Loss by Member Size (GBP)
528
1,000900800700600500400300200100
0
36
34
32
30
28
36
24
22
20
568 565683
901
491
500450400350300250200150100
500
1,800k
1,600k
1,400k
1,200k
1,000k
800k
600k
400k
200k
0
222 171 182 189
470
219
SmallMediumLarge
2009 2010 2011 2012 2013 H1 2014
No. of members 24 22 26 26 33 34
Life 419 402 416 473 652 294
Non-life 109 166 149 210 249 197
Total number of loss events 528 568 565 683 901 491
2009 2010 2011 2012 2013 H1 2014
Life £194 £112 £122 £117 £268 £168
Non-life £28 £59 £60 £72 £202 £51
Total Gross Loss £222 £171 £182 £189 £470 £219
2009 2010 2011 2012 2013 H1 2014
Small £1,613,352 £481,313 £171,545 £280,025 £170,402 £67,883
Medium £227,419 £181,863 £141,469 £312,529 £527,615 £318,165
Large £551,194 £356,345 £509,115 £259,471 £618,267 £601,748
H1 2014 has seen 491 loss events added to the consortium dataset, with a combined value of £219 million. These submissions account for 8.9% of the total number of loss events and 9.5% of the total Gross Loss amount in the entire dataset. The fi gures below show that the total Gross Loss (GBP) over the last two quarters is larger than any of the annual totals from 2010-2012, with growth in the frequency and severity of submissions outstripping membership growth since 2009.
Have you been experiencing increasingly severe events within your own fi rm this year?
Life
Life
Non-life
Non-life
No
. o
f m
em
be
rs
No
. o
f lo
ss e
ven
tsG
BP
GB
P m
illio
ns
2009 2010 2011 2012 2013 H1 2014
2009 2010 2011 2012 2013 H1 2014
2009 2010 2011 2012 2013 H1 2014
“
“6
Overview of 2011-H1 2014 Submissions
Have you performed any seasonality analysis of your internal losses, and has it provided any insights into risk event
reporting process and potential control framework gaps?
There seems to be limited seasonality trending when analysing the number of events submitted each quarter. Interestingly when analysing severity, Gross Loss amounts display a regular trend. Every year (apart from 2014 thus far) Q1 and Q4 have the two highest Gross Loss fi gures. This could potentially indicate an increased focus on more material losses during year-end fi nancial reporting.
“ “
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
Total Number of Loss Events
Gross Loss (GBP millions)
Average Loss (GBP)
350
300
250
200
150
100
50
0
200180160140120100
80604020
0
900k800k700k600k500k400k300k200k100k
0
2011 2012 2013 H1 2014
Q1 155 187 243 319
Q2 109 173 175 172
Q3 130 162 258
Q4 171 161 225
Total number of loss events 565 683 901 491
2011 2012 2013 H1 2014
Q1 £51 £49 £146 £75
Q2 £31 £44 £47 £145
Q3 £45 £40 £102
Q4 £55 £56 £175
Total Gross Loss £182 £189 £470 £219
2011 2012 2013 H1 2014
Q1 £330,055 £263,657 £600,428 £234,340
Q2 £285,210 £255,003 £267,180 £840,694
Q3 £343,781 £244,028 £396,785
Q4 £319,136 £347,151 £777,164
No
. o
f lo
ss e
ven
tsG
BP
GB
P m
illio
ns
2011 2012 2013 H1 2014
2011 2012 2013 H1 2014
2011 2012 2013 H1 2014
7
Cumulative Frequency & Severity Distribution
Is this something that resonates with your own experience over the past year? If not, is there potential for these low frequency/high
severity events to impact your business over the next 6 months and how are you planning on minimising the probability of occurrence?
“ “
Frequency Distribution
Severity Distribution
70
70
60
60
50
50
40
40
30
30
20
20
10
10
0
0
2009-2013H1 2014
2009-2013H1 2014
GBP £10k - £50k
£50k - £100k
£100k - £500k
£500k - £1m
£1m - £5m
£5m - £10m £10m+
2009-2013 58.8% 12.9% 17.9% 4.4% 4.4% 1.0% 0.5%
H1 2014 45.8% 15.0% 20.0% 9.2% 6.7% 2.5% 0.8%
GBP £10k - £50k
£50k - £100k
£100k - £500k
£500k - £1m
£1m - £5m
£5m - £10m £10m+
2009-2013 3.3% 2.3% 9.7% 7.9% 24.2% 18.1% 34.4%
H1 2014 0.8% 0.8% 3.1% 4.0% 10.1% 12.2% 69.1%D
istr
ibu
tio
n %
Dis
trib
uti
on
%
£10k - £50k
£50k - £100k
£100k - £500k
£500k - £1m
£1m - £5m
£5m - £10m
£10m+
£10k - £50k
£50k - £100k
£100k - £500k
£500k - £1m
£1m - £5m
£5m - £10m
£10m+
GBP
GBP
The spike in severity of events over GBP 10m in the first half of 2014 means that those events accounted for 69% of the total Gross Loss submitted to ORIC International, compared to the long-run average of 34% experienced during 2009-2013.
8
Analysis of Near Misses
ORIC International’s study* into the maturity of the risk event process with Oliver Wyman showed that the reporting of near misses is a positive indicator to the maturity of the processes within a firm.
We’ve seen a steady increase in the proportion of near miss events submitted to ORIC International as our membership grows and our members’ internal processes become more developed.
* Contact us for a copy of our study Creating Value from Risk Events
As your business becomes more mature in their event capture process, have you been seeing increased reporting of near misses? In our last quarterly submission, 26% of all
events submitted were near misses, can you beat that? “ “
No
. of n
ear m
isse
s
No
. of n
ear
mis
ses
Number of Near Misses
Quantifiable Near Misses (GBP millions)
Average Potential Loss (GBP)
350
4,000k
300
3,500k
300 140
120
100
80
60
40
20
0
250
3,000k
250
200
2,500k
200
150
2,000k
150
100
1,500k
100
50
500k
1,000k
50
0
0k
0
2009 2010 2011 2012 2013 H1 2014
No. of near misses 58 159 234 300 232 133
2009 2010 2011 2012 2013 H1 2014
No. of near misses 39 74 79 121 93 48
Total potential loss £13 £252 £66 £195 £166 £46
2009 2010 2011 2012 2013 H1 2014
No. of near misses 39 74 79 121 93 48
Average potential loss £323,557 £3,410,220 £834,123 £1,611,919 £1,790,260 £951,807
GB
P m
illio
ns
GB
P
2009 2010 2011 2012 2013 H1 2014
2009 2010 2011 2012 2013 H1 2014
2009 2010 2011 2012 2013 H1 2014
9
Losses by Business Function
How does your Business Function reporting compare? Are there any similarities with our overall dataset? “
“
Percentage of Losses
Percentage of Gross Loss Amount
50
55
50
40
40
45
45
30
30
35
35
20
20
25
25
15
15
10
10
5
5
0
0
Accounting/Finance
Accounting/Finance
Actuarial-Pricing
Actuarial-Pricing
Actuarial-Reserving
Actuarial-Reserving
Claims
Claims
Facilities
Facilities
Customer Service/
Policy Administration
Customer Service/
Policy Administration
HR
HR
Investment/Treasury
Investment/Treasury
IT
IT
Legal and Compliance
Legal and Compliance
Marketing
Marketing
Other
Other
Outsourcing
Outsourcing
Outwards RI
Outwards RI
Procurement
Procurement
Sales and Distribution
Sales and Distribution
Tax
Tax
Underwriting
Underwriting
2009-2013H1 2014
2009-2013H1 2014
Business Function Submission Quarter
% of Loss
Events
% of GrossLoss
Average Loss(GBP)
Accounting/Finance2009-2013 8.2% 17.5% £812,100H1 2014 7.7% 53.7% £3,100,718
Actuarial-Pricing2009-2013 1.6% 4.0% £934,999H1 2014 1.0% 0.5% £211,492
Actuarial-Reserving2009-2013 0.4% 4.4% £4,157,926H1 2014 0.2% 0.1% £185,297
Claims2009-2013 9.3% 6.4% £262,894H1 2014 10.4% 1.9% £83,362
Customer Service/Policy Administration
2009-2013 46.2% 27.0% £222,465H1 2014 41.1% 24.8% £268,815
Facilities2009-2013 6.2% 4.4% £58,903H1 2014 0.0% 0.0% £0
HR2009-2013 0.8% 0.1% £53,454H1 2014 2.0% 0.2% £52,406
Investment/Treasury2009-2013 1.8% 2.6% £565,291H1 2014 1.8% 1.0% £243,460
IT2009-2013 4.3% 3.8% £335,697H1 2014 6.5% 4.7% £324,618
Legal and Compliance2009-2013 0.6% 0.7% £466,182H1 2014 2.4% 0.7% £126,600
Marketing2009-2013 0.9% 9.0% £3,957,034H1 2014 2.2% 0.3% £51,188
Other2009-2013 2.5% 5.6% £855,574H1 2014 2.0% 0.9% £207,949
Outsourcing2009-2013 2.4% 2.3% £360,382H1 2014 1.6% 2.0% £560,418
Outwards RI2009-2013 0.2% 0.2% £324,359H1 2014 0.2% 0.0% £29,638
Procurement2009-2013 0.2% 0.1% £181,104H1 2014 0.8% 0.1% £37,223
Sales and Distribution2009-2013 13.2% 9.2% £265,170H1 2014 6.9% 3.2% £204,510
Tax2009-2013 0.5% 1.1% £903,339H1 2014 0.6% 0.3% £208,166
Underwriting2009-2013 6.7% 5.9% £338,218H1 2014 12.2% 5.6% £203,785
Lo
ss E
ven
ts %
Gro
ss L
oss
%
The most obvious shifts in the fi rst half of 2014 are the increase of Underwriting events and the severity of Accounting/Finance events. However Customer Service/Policy Administration teams still account for the highest number of events and the second largest percentage of total Gross Loss.
10
Risk Event Level 1 (H1 2014) No. of Loss Events
% of Loss Events
% of Gross Loss
Average Loss (GBP)
Business Disruption and System Failures 44 9.0% 3.3% £164,223Clients, Products and Business Practices 50 10.2% 5.1% £221,602Damage to Physical Assets 1 0.2% 0.0% £15,750Employment Practices and Workplace Safety
9 1.8% 0.1% £32,015
Execution, Delivery and Process Management 354 72.1% 86.6% £536,309
External Fraud 25 5.1% 2.4% £206,872Internal Fraud 8 1.6% 2.6% £714,890
Grand Total 491 100.0% 100.0% £446,749
Analysis of Loss Events at Categorisation Levels 1 & 2
Execution, Delivery & Process Management is consistently the most frequent and severe high-level risk category however we try and divide our dataset.
Although the severity of single events can impact this in the short run, this is a pervasive trend.
Do you have any periods that are an exception to this rule? If so, have you analysed why this is the case during those periods and are there any identifiable lessons from them? “ “
Risk Event Level 2 (H1 2014) No. of Loss Events
% of Loss Events
% of Gross Loss
Average Loss (GBP)
Advisory Activities 16 3.3% 0.4% £54,893Customer Intake and Documentation 54 11.0% 4.0% £163,464Customer or Client Account Management
141 28.7% 9.3% £145,361
Disasters and Other Events 1 0.2% 0.0% £15,750Diversity and Discrimination 1 0.2% 0.0% £51,213Employee Relations 7 1.4% 0.1% £25,665Improper Business or Market Practices 3 0.6% 2.6% £1,901,326Monitoring and Reporting 8 1.6% 0.2% £44,743Product Flaws 9 1.8% 0.2% £40,884Safe Environment 1 0.2% 0.0% £57,271Selection, Sponsorship and Exposure 1 0.2% 0.1% £100,000Suitability, Disclosure and Fiduciary 21 4.3% 1.8% £191,899Systems 44 9.0% 3.3% £164,223Systems Security 1 0.2% 0.0% £15,750Theft and Fraud 31 6.3% 5.0% £350,331Trade Counterparties 4 0.8% 0.1% £60,997Transaction Capture, Execution and Maintenance 137 27.9% 72.7% £1,164,173
Unauthorised Activity 1 0.2% 0.0% £14,925Vendors and Suppliers 10 2.0% 0.2% £43,666
Grand Total 491 100.0% 100.0% £446,749
Risk Event Level 2 (2009-2013) No. of Loss Events
% of Loss Events
% of Gross Loss
Average Loss (GBP)
Advisory Activities 250 7.7% 5.1% £250,460Customer Intake and Documentation 198 6.1% 3.3% £203,425Customer or Client Account Management
699 21.5% 9.9% £174,832
Disasters and Other Events 12 0.4% 0.1% £144,296Diversity and Discrimination 2 0.1% 0.0% £135,851Employee Relations 25 0.8% 0.2% £92,845Improper Business or Market Practices 27 0.8% 2.2% £985,464Monitoring and Reporting 37 1.1% 3.4% £1,137,342Product Flaws 32 1.0% 11.0% £4,253,831Safe Environment 12 0.4% 0.0% £16,052Selection, Sponsorship and Exposure 10 0.3% 0.7% £875,476Suitability, Disclosure and Fiduciary 92 2.8% 1.3% £180,073Systems 254 7.8% 3.0% £146,627Systems Security 2 0.1% 0.0% £47,500Theft and Fraud 132 4.1% 7.2% £670,252Trade Counterparties 90 2.8% 1.6% £213,780Transaction Capture, Execution and Maintenance 1,298 40.0% 47.5% £450,720
Unauthorised Activity 9 0.3% 0.2% £290,476Vendors and Suppliers 64 2.0% 3.3% £628,763
Grand Total 3,245 100.0% 100.0% £379,874
Risk Event Level 1 (2009-2013) No. of Loss Events
% of Loss Events
% of Gross Loss
Average Loss (GBP)
Business Disruption and System Failures 254 7.8% 3.0% £146,627Clients, Products and Business Practices 411 12.7% 20.3% £609,894Damage to Physical Assets 12 0.4% 0.1% £144,296Employment Practices and Workplace Safety
39 1.2% 0.2% £71,422
Execution, Delivery and Process Management 2,386 73.5% 68.9% £355,860
External Fraud 114 3.5% 1.2% £124,523Internal Fraud 29 0.9% 6.3% £2,654,718
Grand Total 3,245 100.0% 100.0% £379,874
11
Frequency Heat-maps
-1%1-5%5%+
Heat-maps can be very useful for identifying areas to focus control assessments and internal audits. Comparing the trends in the ORIC data shows a significant increase in the number of events in the Underwriting area, and significantly more severe events in Accounting/Finance. This provides two areas where there is a justifiable reason to perform investigations into their processes and control frameworks in relation to that aspect of their work.
You can see there is some consistency between the two reporting periods, with “Execution, Delivery and Process Management” events consistently accounting for 5%+ of all submitted loss events across these departments: Accounting/Finance, Claims, Customer Service/Policy Administration & Underwriting.
H1 2014 Business Disruption and System Failures
Clients, Products and Business Practices
Damage to Physical Assets
Employment Practices and Workplace Safety
Execution, Delivery and Process Management
External Fraud Internal Fraud Grand Total
Accounting/Finance 0.8% 0.4% 0.0% 0.0% 5.9% 0.4% 0.2% 7.7%Actuarial-Pricing 0.0% 0.2% 0.0% 0.0% 0.8% 0.0% 0.0% 1.0%Actuarial-Reserving 0.0% 0.0% 0.0% 0.0% 0.2% 0.0% 0.0% 0.2%Claims 1.8% 0.6% 0.0% 0.0% 6.1% 1.6% 0.2% 10.4%Customer Service/Policy Administration 0.8% 2.4% 0.0% 0.2% 37.5% 0.2% 0.0% 41.1%HR 0.4% 0.2% 0.0% 0.8% 0.4% 0.2% 0.0% 2.0%Investment/Treasury 0.0% 0.4% 0.0% 0.0% 1.4% 0.0% 0.0% 1.8%IT 4.3% 0.0% 0.0% 0.0% 1.8% 0.2% 0.2% 6.5%Legal and Compliance 0.0% 1.0% 0.0% 0.0% 1.4% 0.0% 0.0% 2.4%Marketing 0.2% 1.0% 0.0% 0.0% 1.0% 0.0% 0.0% 2.2%Other 0.2% 0.0% 0.0% 0.0% 1.0% 0.4% 0.4% 2.0%Outsourcing 0.0% 0.2% 0.0% 0.0% 0.8% 0.4% 0.2% 1.6%Outwards RI 0.0% 0.0% 0.0% 0.0% 0.2% 0.0% 0.0% 0.2%Procurement 0.0% 0.0% 0.2% 0.0% 0.6% 0.0% 0.0% 0.8%Sales and Distribution 0.0% 3.5% 0.0% 0.0% 2.0% 1.0% 0.4% 6.9%Tax 0.0% 0.2% 0.0% 0.0% 0.4% 0.0% 0.0% 0.6%Underwriting 0.4% 0.0% 0.0% 0.8% 10.4% 0.6% 0.0% 12.2%
Grand Total 9.0% 10.2% 0.2% 1.8% 72.1% 5.1% 1.6% 100.0%
2009 – 2013 Business Disruption and System Failures
Clients, Products and Business Practices
Damage to Physical Assets
Employment Practices and Workplace Safety
Execution, Delivery and Process Management
External Fraud Internal Fraud Grand Total
Accounting/Finance 0.4% 0.2% 0.1% 0.1% 7.0% 0.3% 0.1% 8.2%Actuarial-Pricing 0.2% 0.1% 0.0% 0.0% 1.3% 0.0% 0.0% 1.6%Actuarial-Reserving 0.0% 0.0% 0.0% 0.0% 0.4% 0.0% 0.0% 0.4%Claims 0.6% 1.3% 0.0% 0.0% 6.4% 0.7% 0.3% 9.3%Customer Service/Policy Administration 2.1% 1.3% 0.0% 0.3% 40.7% 1.6% 0.2% 46.2%Facilities 0.1% 0.0% 0.1% 0.0% 0.1% 0.0% 0.0% 0.4%HR 0.0% 0.0% 0.0% 0.4% 0.3% 0.0% 0.1% 0.8%Investment/Treasury 0.0% 0.1% 0.0% 0.0% 1.7% 0.0% 0.0% 1.8%IT 2.5% 0.1% 0.0% 0.0% 1.6% 0.1% 0.0% 4.4%Legal and Compliance 0.0% 0.2% 0.0% 0.0% 0.4% 0.0% 0.0% 0.6%Marketing 0.1% 0.3% 0.0% 0.1% 0.5% 0.0% 0.0% 0.9%Other 0.3% 0.2% 0.1% 0.1% 1.4% 0.2% 0.1% 2.5%Outsourcing 0.5% 0.0% 0.0% 0.0% 1.7% 0.2% 0.0% 2.4%Outwards RI 0.1% 0.0% 0.0% 0.0% 0.1% 0.0% 0.0% 0.2%Procurement 0.0% 0.0% 0.0% 0.0% 0.2% 0.0% 0.0% 0.2%Sales and Distribution 0.5% 8.0% 0.0% 0.1% 4.3% 0.3% 0.1% 13.2%Tax 0.0% 0.1% 0.0% 0.0% 0.3% 0.0% 0.0% 0.5%Underwriting 0.5% 0.8% 0.0% 0.2% 5.2% 0.1% 0.0% 6.7%
Grand Total 7.8% 12.7% 0.4% 1.2% 73.5% 3.5% 0.9% 100.0%
Key
12
Severity Heat-maps
-1%1-5%5%+
In comparison with the Frequency heat-maps on the previous page, there appears to be more variance when assessing the internal distribution of Gross Loss amounts. Execution, Delivery and Process Management, Accounting/Finance and Customer Service/Policy Administration are consistently high; however fewer departments account for 1-5% of the total Gross Loss in H1 2014 compared to 2009-2013. Perhaps this is due to Accounting/Finance representing over 50% of the total Gross Loss so far this year.
Replicating this format for your own losses, are there any areas that are brought to your attention?
Are any of them surprising to you?“ “
H1 2014 Business Disruption and System Failures
Clients, Products and Business Practices
Damage to Physical Assets
Employment Practices and Workplace Safety
Execution, Delivery and Process Management
External Fraud Internal Fraud Grand Total
Accounting/Finance 0.7% 0.4% 0.0% 0.0% 52.4% 0.2% 0.0% 53.7%Actuarial-Pricing 0.0% 0.0% 0.0% 0.0% 0.5% 0.0% 0.0% 0.5%Actuarial-Reserving 0.0% 0.0% 0.0% 0.0% 0.1% 0.0% 0.0% 0.1%Claims 0.4% 0.2% 0.0% 0.0% 0.7% 0.5% 0.1% 1.9%Customer Service/Policy Administration 0.2% 0.6% 0.0% 0.0% 23.9% 0.0% 0.0% 24.8%HR 0.0% 0.1% 0.0% 0.1% 0.0% 0.0% 0.0% 0.2%Investment/Treasury 0.0% 0.2% 0.0% 0.0% 0.8% 0.0% 0.0% 1.0%IT 1.6% 0.0% 0.0% 0.0% 3.1% 0.0% 0.0% 4.7%Legal and Compliance 0.0% 0.6% 0.0% 0.0% 0.1% 0.0% 0.0% 0.7%Marketing 0.1% 0.1% 0.0% 0.0% 0.1% 0.0% 0.0% 0.3%Other 0.2% 0.0% 0.0% 0.0% 0.2% 0.0% 0.5% 1.0%Outsourcing 0.0% 0.0% 0.0% 0.0% 0.2% 0.1% 1.8% 2.0%Outwards RI 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%Procurement 0.0% 0.0% 0.0% 0.0% 0.1% 0.0% 0.0% 0.1%Sales and Distribution 0.0% 2.5% 0.0% 0.0% 0.3% 0.1% 0.2% 3.2%Tax 0.0% 0.2% 0.0% 0.0% 0.1% 0.0% 0.0% 0.3%Underwriting 0.0% 0.0% 0.0% 0.0% 4.2% 1.4% 0.0% 5.6%
Grand Total 3.3% 5.1% 0.0% 0.1% 86.6% 2.4% 2.6% 100.0%
2009 – 2013 Business Disruption and System Failures
Clients, Products and Business Practices
Damage to Physical Assets
Employment Practices and Workplace Safety
Execution, Delivery and Process Management
External Fraud Internal Fraud Grand Total
Accounting/Finance 0.2% 0.5% 0.0% 0.0% 16.7% 0.1% 0.0% 17.5%Actuarial-Pricing 0.0% 0.1% 0.0% 0.0% 3.8% 0.0% 0.0% 4.0%Actuarial-Reserving 0.0% 0.0% 0.0% 0.0% 1.4% 0.0% 3.0% 4.4%Claims 0.1% 1.1% 0.0% 0.0% 4.9% 0.1% 0.3% 6.4%Customer Service/Policy Administration 0.7% 0.6% 0.0% 0.0% 25.1% 0.6% 0.0% 27.0%Facilities 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.1%HR 0.0% 0.0% 0.0% 0.1% 0.0% 0.0% 0.0% 0.1%Investment/Treasury 0.0% 0.1% 0.0% 0.0% 2.5% 0.0% 0.0% 2.6%IT 1.5% 0.7% 0.0% 0.0% 1.7% 0.0% 0.0% 3.8%Legal and Compliance 0.0% 0.0% 0.0% 0.0% 0.7% 0.0% 0.0% 0.7%Marketing 0.0% 8.8% 0.0% 0.0% 0.1% 0.0% 0.0% 9.0%Other 0.1% 0.3% 0.1% 0.0% 2.2% 0.0% 2.9% 5.6%Outsourcing 0.1% 0.1% 0.0% 0.0% 2.0% 0.1% 0.0% 2.3%Outwards RI 0.1% 0.0% 0.0% 0.0% 0.1% 0.0% 0.0% 0.2%Procurement 0.0% 0.0% 0.0% 0.0% 0.1% 0.0% 0.0% 0.1%Sales and Distribution 0.1% 5.5% 0.0% 0.0% 3.3% 0.2% 0.0% 9.2%Tax 0.0% 0.1% 0.0% 0.0% 1.0% 0.0% 0.0% 1.1%Underwriting 0.2% 2.3% 0.0% 0.1% 3.3% 0.1% 0.0% 5.9%
Grand Total 3.0% 20.3% 0.1% 0.2% 68.9% 1.2% 6.3% 100.0%
Key
13
ORIC International and You: Stronger Together
We trust that you have found the insights and analyses in this report useful. ORIC International is the only established consortium for our sector and we have been collecting quantitative and qualitative data on operational risk events from our members since 2005 which has now grown to 40 fi rms. There are over 7,000 risk events in our consortium risk event dataset, representing 207 cumulative years of data.
Our consortium data service is a fundamental aspect of our member value proposition. As a sector we face some unique challenges due to the scarcity of risk event data. Operational risk events appear to occur less frequently and can take time to crystalise, therefore there is an intrinsic value in consortium participation.
By sharing risk intelligence the industry becomes stronger together.
Join UsIf you want to fi nd out more about membership, our consortium data service and the other resources available to you through ORIC International, please contact us today.
Our Membership
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OperationalRisk Landscape
H1 2014
Perspectives on the risk events thatcould affect your firm’s future
2nd Edition
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