Devising a taxonomy might sound like a rather arcane task. But for operational risk managers, it is a job that underpins almost everything else they do.
A risk taxonomy, or register of risks, is a way of categorising the principal risks a firm faces. Typically, banks' op risk taxonomies have varying levels of detail, with each risk being set alongside relevant controls. Op risk practitioners say a robust taxonomy helps foster a common language around the firm's risks, assists in risk reporting