Banks Must Use External Loss Data for Effective Operational Risk Management

ID Number: G00168798

17 June 2009

Douglas McKibben Mary Knox

External risk data is a key ingredient for forecasting, modeling and managing operational risk. We profile issues surrounding the management and use of external risk data, and identify sources.

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Table of Contents

Analysis

1.0

Overview

2.0

"Operational Risk" Defined

2.1		The Operational Risk Measurement Requirement
2.2		Operational Risk Data

3.0

External Risk Data

3.1

Why External Operational Risk Data Is Important

3.2

External Risk/Operational Risk Data Satisfaction and Confidence

3.2.1		Comprehensiveness/Breadth
3.2.2		Detail/Granularity
3.2.3		Timeliness
3.2.4		Accuracy

3.3

Implications

4.0

Sources of External Risk Data

4.1		Operational Risk Loss Event Database Vendors
4.2		Industry Consortia
4.3		Assessing the Data
4.4		Vendor-Provided Operational Risk Loss Event Databases
4.5		Consortia Operational Risk Loss Databases
4.6		Representative National Operational Risk Consortia

5.0

What the CIO and IT Management Team Should Do

6.0

Recommendations

Recommended Reading

List of Figures

	Figure 1.	Confidence/Satisfaction With External Operational Risk Data

	Figure 2.	Loss Events — Sources and Requirements

Data Quality
Banking Systems
Banking Business Strategies
Operational Risk Management

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Resource Id: 1025613