ORX Standards
All ORX members are required to submit data to a common standard and in a common format. The standards are developed and maintained by the ORX Definitions Working Group and published, in detail, in the form of the ORX Operational Risk Reporting Standards.
Click here to receive a copy of the ORX Operational Risk Reporting Standards.
ORX strives for consistency in the data it collects from members. ORX members are required to report all losses over €20,000. Above this threshold it is the objective of ORX that the data from every member is complete. Each loss is then categorized according the following primary attributes:
Classification Data
• Reference ID number (Member generated)
• Business Line Code - Level 2
• Event Category – Level 2
• Country (ISO Code)
• Credit related
• Related Event Reference ID
Reference Dates
• Date of Occurrence
• Date of Discovery
• Date of Recognition
Amounts
• Gross Loss Amount
• Direct Recovery
• Indirect Recovery
Exposure Indicators by Business Line – Level 2
• Gross Income
The ORX Business Lines differ slightly from the Business Lines proposed by the Basel Committee on Banking Supervision. The primary difference is the inclusion, by ORX, of a business line category called Corporate Items. This category is strictly used to capture corporate level items or fines for group-level financial misreporting. The Corporate Items business line accounts for approximately 2% of all loss events by number and 4% by loss amount.
It is likely that this standard will evolve as ORX members demand more from the database. In April 2009 ORX concluded some joint work, with the Risk Management Association (RMA), to agreement standards for additional loss attributes of Product and Process. An overview is provided below to receive the full detail please follow the link below.
Click here to receive a copy of the ORX Product and Process Standards.
For the Product categories there are 10 Level 1 and 68 Level 2 subsets. As not all Operational Risk events can be allocated to a product, for example those in Disasters & Public Safety, and additional category has been created “Not Product Related”. Firms will be required to report loss data at Level 2. Table 1 (below) provides an overview.
Table 1: Overview of Product Categories for Loss Reporting
For the Process categories there are 16 Level 1 and 71 Level 2 subsets. Although firms will be required to report Level 1 attributes, the Level 2 categories are to promote consistency. The Level 1 categories are sub-divided into “Non-Corporate Functions” and “Corporate Functions”. These Process categories can be thought of as describing the chain of events around a transaction, the Transaction Chain, or the Value Chain. As a result, it is expected that these process steps can be found across many financial service companies, including insurance and asset management. Table 2 (below) provides an overview of the Level 1 Process categories.
Table 2: Overview of Process Categories for Loss Reporting.
ORX will initially enable the voluntary reporting per loss event of these additional attributes. Reporting will become required at Q3 2010.
ORX continues to review its loss reporting standards and publishes, for member usage, “case law” on the interpretation of those standards. In addition ORX is developing standards to apply at the level of individual sector and national sector services.
ORX is also developing separate standards to apply to Large Industry events. ORX defines Large Events as those impacting multiple institutions involving per institution losses in excess €10,000,000. In the context of the ORX Operational Risk Reporting Standards ORX will shortly begin to publish guidance on how such events should be categorised.