The Financial Crisis of 2008 and Subsequent Market Changes
The Business Case for Insurers to Adopt Operational Risk Management
Insurance: Its Products, Services and Business Operations
Insurers’ Operational Risk Governance and Framework
Internal Risk-Event Reporting
External Loss Data
Risk and Control Assessments
Reporting and Analysis
The Past, the Present and the Future of Operational Risk Modelling
The Insurance Landscape
Three Lines of Defence
In this chapter, we look at the basics of external loss data and its use for improving operational risk management in the context of the broader operational risk framework. External loss data can help insurance companies inform their operational risk and internal control profile. Similarly, to banking, insurance companies over the past decade have begun to collect internal risk-event data. However, as was the case with banking back in the late 1990s, it is the case today with insurers: there is simply lack of internal risk-event history, so there is an ever-increasing need for external operational risk loss data.
Many insurers are using external loss data today for the purposes of benchmarking and helping with calculating operational risk capital requirements, and also informing operational risk scenarios. External data is also helpful for prompting discussion with business management. It is for this and many other reasons that external data is very useful and forms part of the operational risk-management framework.
WHAT IS EXTERNAL LOSS DATA?
By definition external loss data signifies operational risk losses suffered by financial institutions, and it