Algorithmics launches Algo First 4.0

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TORONTO / LONDON – An updated version of the Algo First database of operational risk events has been launched. Algo First’s database relies on a case-study approach to operational risk-loss events – emphasising real-life relevance. The qualitative approach employed aims to provide causal explanations and applicable advice for event triggers and control breakdowns, through analysis of case studies covering around 7,000 risk-loss events.

“We hold global user conferences and the work we did on updating the front end of the First database reflects input from the entire client base,” says Dan Mudge, Algorithmics’ group managing director for op risk and content. Algorithmics also emphasises the importance of the database’s reports on clients’ peers in comparing operational risk exposure and management. The system enhancements aim to facilitate peer comparison. “We created the ability to generate these peer reports in the system instead of having to create them offline,” says Penny Cagan, head of research at Algo Op Vantage.

Cagan says the qualitative nature of its case-study approach assists with a wide range of issues, including cultural issues and viability of certain business models. “Our clients use the cases for inputs into self assessments, training initiatives, new product research and scenario models,” she says.

Mudge also highlighted the database’s role as an “institutional memory”, allowing clients to store, manipulate and retrieve case studies for scenario analysis. The increasing use of scenario analysis, according to Mudge, facilitates the use of cases as real-life examples when they are working on creating scenarios and envisioning what could happen to them.

In the current market volatility, case studies involving troubled institutions such as Northern Rock are under consideration. Cagan says that the case studies are “constantly being updated – especially in this volatile market environment”.

Ongoing enhancements are expected over the coming year, developed in conjunction with client user groups, and retaining the multi-tiered format and depth of the research underlying the case studies. “We are developing about a dozen further enhancements, including email alerts and automatic notification when new events are added to the database that match saved search criteria and peer reports,” says Cagan.

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• Topics
• Algorithmics
• Risk management
• Foreign exchange
• People
• Operational risk