The case for scenarios in op risk loss databases

LONDON – Scenario assessment is a sound tool for operational risk management but it is subjective and every financial institution approaches the scenario analysis process differently. Compiling scenarios into a loss database consortium seems a difficult task, but this is the way the market is heading.

The Operational Riskdata eXchange Association (ORX) has recently undertaken a scenario analysis study, which was intended to give ORX a sense of where financial institutions are at with their