Risk is a fact of life, both personal and professional. Regardless of the industry, risk must be gauged and preparations made to be prepared for the “what if”. This interesting topic came to us from Risk.net in their article, “Industry-led op risk taxonomy launches.

This feels like the perfect opportunity for a taxonomy or classification to define and outline the variety and scope of the various risks. Fortunately someone else thought so as well.

A new bank-led system for categorizing operational risks reflects the increased importance being accorded to risks outside traditional market and credit risk parameters since the publication of the Basel Committee on Banking Supervision’s taxonomy. The new taxonomy is intended to create a common language for financial institutions to share information and a framework for understanding the causes and effects of operational loss events. This coordinated and collaborative effort to create consistency will also mitigate risk to both the consumer and the institution.

Melody K. Smith

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