The Association of British Insurers and SAS, the risk intelligence firm, are launching the Operational Risk Insurance Consortium, a new international initiative to assist the insurance industry with quantifying and managing operational risk.
Members will be able to aggregate the experience of the insurance industry’s operational loss data.
The aim is to improve the mangement of internal data and potentially assist in individual capital adequacy requirements.
The new database will provide quarterly information on losses due to human errors, external events and failed systems and processes. The data will be supplied in monetary amounts along with narrative accounts.
Members include Friends Provident, HBOS, Legal & General, RBS Insurance, Standard Life and Bupa. Sixteen insurance companies have signed up to ORIC and another thirty have expressed an interest.
The ABI will oversee the consortium including the administration of the data while SAS provides the technology which includes converting the data into risk intelligence and benchmarking.
ABI director of financial regulation and taxation Peter Vipond says: “With new capital requirement rules from the FSA, and continuing regulatory developments in Europe such as Solvency 2, the need for sophisticated operational risk management tools in the insurance industry has never been greater.
“We believe this will be an invaluable tool for companies seeking to reduce loss from operational risk and enhance their own risk processes.”