Causal Taxonomy: Cause celebre

Causal taxonomy was around in op risk's beginnings but was put aside as the discipline evolved. Now the re-evaluation of op risk prompted by the financial crisis has pushed causal analytics back up the agenda. Rich Cech proposes a potential future role

Causal taxonomy seldom commands the same high level of attention among operational risk practitioners as capital models or event typing. This is despite the fact that the original Basel definition of 'operational risk' was stated in causal terms - introducing the now familiar litany of 'people, process, systems and external'1. In practice, operational risk methodology developed along event-based lines. There were sound reasons for this, as discussed below, but the question now arises: has the