External loss data helps: evidence from the ORX database

Operational risk loss data can prove invaluable for firms looking to gain a better understanding of potential problems. By Eric Cope and Simon Wills

"Every happy family is the same but all unhappy families are different." A similar logic is sometimes held to apply to unhappy banks and their operational risk losses. The argument runs that banks are unique and, therefore, so are their losses and their propensity to suffer losses. We do not question the uniqueness of banks and of course every loss is different, but are they so different? Specifically, is there enough similarity to make the collection of external loss data useful? To date