ABA starts data collection for operational risk database

WASHINGTON, DC -- The American Bankers Association (ABA) said in late December it was starting an operational risk database. The confidential pooling venture, available exclusively to ABA members, will cost subscribers $10,000 a year.

The database will be run by the Operating Risk Committee, formed in December 2002 by the ABA, the main trade organisation for the US banking industry. The committee is set to begin collecting information for the database in the first quarter of 2003, and expects to distribute its first database report to members at the start of the second quarter of 2003. This will give the ABA and participating banks three years of benchmarking data in preparation for the implementation of the Basel II Accord, the ABA said.

Consistent, accurately categorised loss data is vital for banks using the advanced approaches to measuring operational risk under the complex, risk-based Basel II bank safety rules that global banking regulators want to bring into force for major banks by the end of 2006.

"Good benchmarking data will lead to best practices and good performance strategies that can benefit the entire banking industry," said Robert Jones, director of operating risk management at US financial services firm FleetBoston Financial, who chairs the ABA Operating Risk Committee.

"The ABA has a proven record of confidential data collection and analysis in areas such as cheque fraud. They are the perfect, trusted third-party to facilitate such a highly sensitive programme," said Jones. "Better data will help banks develop better strategies to reduce losses and will help banks develop more efficient methods for determining their capital reserves."

Members of the committee will include senior managers from financial institutions such as Bank of America, BB&T, Comerica, First Tennessee, FleetBoston, Hibernia, Key Bank, National City, Wachovia and Zions Bank.