The Fundamentals of Operational Risk for Insurers
First published:
ISBN: 9781782723233
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Internal Risk-Event Reporting
Internal Risk-Event Reporting
Introduction
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
Risk Indicators
Reporting and Analysis
The Past, the Present and the Future of Operational Risk Modelling
The Insurance Landscape
Three Lines of Defence
Reputation(al) Risk
Conduct Risk
Conclusions
INTRODUCTION
Risk-event data is an essential component for managing operational risk. Collection and reporting of internal risk-event data can offer valuable insights to support risk identification, assessment and measurement of operational risk. Effective risk-event analysis ensures the business fully understands the root cause of a given event to determine the most appropriate risk treatment. Very often, risk-event data forms part of the risk-monitoring process as risk-and-control indicators. Additionally, risk-event data is vital for measuring operational risk and it is typically the first of all operational risk elements to be adopted when implementing an operational risk-management programme.
In this chapter, we will discuss reasons for risk-event reporting and common methods used, and define key data elements. This chapter will also explore and provide for causal analysis and the interconnections of risk-event data with the broader operational risk framework.
WHAT IS A RISK EVENT?
Historically, the focus on risk-event data has been on the collection of losses or, in other words, errors that result in a direct economic loss to the firm. However, risk events go
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