Trust is critical for operational risk loss databases

Data-sharing consortiums depend on trust, but individual firms face a prisoner's dilemma whereby providing false information can sometimes be beneficial


Operational risk data-sharing works well in many developed countries, so why don't we see operational risk data consortiums all over the world? The answer lies in trust. In the countries where we do not see such data-sharing arrangements there may be different aspects of trust deficiency. Our game theory-based analysis, just published in the Journal of Operational Risk, shows that sufficient incentives, based on adequate controls and supervision, and a more stable economic environment, lead t