The Association of British Insurers and SAS, a business intelligence software provider, have launched the Operational Risk Insurance Consortium (ORIC), a new international initiative to assist the insurance industry with quantifying and managing operational risk.
According to the ABI and SAS, ORIC members will benefit from the ability to evaluate the collective experience of the insurance industry’s operational loss data, which will help to improve understanding and management of insurers’ own internal data, as well as potentially assisting with regulatory requirements such the new Individual Capital Adequacy (ICA) standards.
The new database will provide quarterly information on losses due to human error, external events and failed processes or systems, by both monetary amount and narrative description of the event.
The ABI will oversee the consortium, including administration of the data and ensuring, through the use of the SAS application, data quality and consistency. SAS is providing the technology that includes converting the loss event data into risk intelligence, data management and data quality, as well as benchmarking and reporting capabilities.
Peter Vipond, ABI director of Financial Regulation and Taxation commented: With new capital requirement rules from the FSA, and continuing regulatory developments in Europe such as Solvency II, the need for sophisticated operational risk management tools in the insurance industry has never been greater. Sixteen insurance companies have already signed up to ORIC, and a further thirty have expressed an interest.
We believe this will be an invaluable tool for companies seeking to reduce loss from operational risk and enhance their own risk processes.