On Tuesday 29 January, ORIC International held their inaugural Capital Benchmarking event to celebrate the launch of the 2018 Capital Benchmarking Survey. The event was extremely well attended, with representatives from over 30 of our member firms, as well as the regulator and strategic partners.
The primary focus of the event was to examine some of the key takeaways from the 2018 iteration of the survey, some of which included:
• There is a need for firms to use more external loss data (including near misses) in their capital modelling processes.
• Regulators identify that there are still vulnerabilities in the capital framework particularly around modelling approaches and model validation.
• The centralising and standardising of risk event data collection processes by Group ERM is encouraging divisional firms to supplement and benchmark their own datasets.
• Outputs of the model are consistently being used to set operational risk capital, influence business decision making (i.e. pricing) and inform risk assessments.
• There is a need for firms to better clarify how expected loss should be treated and avoid potential for double counting.
Most of these topics will help to form the forward agenda for the internal model working group in 2019.
Following the results of the survey, Thomas Jaeggi from Marsh presented on the importance of aligning operational risk and insurance. As part of his presentation, Thomas detailed the state of the market at present day, the various approaches to incorporating insurance into models and potential transfer options and how these could be covered.
Tom Ivell and Sean McGuire from Oliver Wyman then examined the future trends in operational risk modelling and looked in detail at the current range of operational risk modelling and the evolution of operational risk models in recent history and moving forward.
Shahine Sivakumar and Jay Mistry of ORIC then concluded the event by giving an overview of ORIC International’s new scenario assessment database including the results and insights into the 2018 scenario data capture and the plans for 2019.
We’d like to thank all our speakers and those that attended the event. If you’re interested in getting a copy of our Capital Benchmarking Survey – summary report, you can download a copy from the 'Examples of thought leadership' area of the website.