November 28, 2000 - NetRisk is pleased to announce on behalf of the Multinational Operational Risk Exchange™ (MORE) that it began receiving submissions of operational risk loss data from member institutions earlier this month. In addition, RMA - The Risk Management Association, (formerly Robert Morris Associates) has joined its operational risk data consortium activities with those of MORE, and has been appointed as its Data Manager. RMA will join NetRisk, Managing Agent for MORE, in providing data collection, scaling, cleansing, dissemination and analytical services to member institutions.
The submissions of data mark the first time such comprehensive, enterprise-wide, non-public data on operational risk losses has been submitted to a consortium that is controlled by the institutions providing the data. The MORE consortium plans to return consolidated data along with statistical risk profiles back to member institutions prior to December 31, 2000. "It is exciting and important to the industry to see the prospect of sharing operational risk data become a reality. MORE has taken a great step forward," said Robin Phillips, Vice President, J.P. Morgan and a member of MORE's Organizing Committee. "The availability of shared, quality data enables institutions to broaden the analysis and benchmarking of their operational risk profiles. This will be particularly beneficial with the publication of the new regulatory capital requirements for operational risk next year."
Dan Mudge, a founding member of NetRisk, added "the MORE consortium has engaged in a historic opportunity to be in the forefront of data-sharing efforts. There has been a lot of talk about the need to share such data, but the MORE group of financial institutions is the first to step up to the plate and begin the process. The importance of this event is enhanced by the first merging of efforts between consortia."
RMA will collaborate with NetRisk, and will be responsible for the collection, validation and consolidation of the operational loss data submitted by MORE members. RMA has also announced the merger of its operational risk consortium efforts with those of MORE. "We are pleased to be working with NetRisk, and the MORE consortium as they begin to implement the industry's first exchange of enterprise-wide operational risk data," said Nick Hayes, Director of Capital Management at RMA. "We have a great deal of experience with receiving and managing data with similar sensitivity from many of the same institutions, and are confident that we can help facilitate the objectives of MORE's data exchange."
Members of the consortium will send their operational loss data to RMA in pre-specified standard formats. The data will be reviewed for reasonableness according to standards set by MORE. Once the data is validated it will be consolidated and sent to NetRisk where it will be analyzed, scaled, and returned to members for further analysis. The sharing of internal data is an important component in the process of monitoring and benchmarking operational risks. The establishment of such a reference tool will allow the members to model their own operational risks and to compare how they are doing against a group of their peers.
"One of the biggest challenges is to provide valuable information back to each MORE participant, while ensuring that there is no reasonable way to identify the institution who suffered the loss," said Rob Ceske, Head of the Operational Risk Division at NetRisk. "We believe that MORE has been able to develop a methodology that will meet this complex requirement."
Members of the MORE consortium -- a geographically diverse collection of leading financial institutions -- have agreed upon an impressive list of standards in their groundbreaking initiative. The standards are based on both the initiatives of the Industry Technical Working Group, sponsored by the IIF, and NetRisk's own Proximate Cause and Business Unit hierarchies. It is anticipated that the standards developed by the MORE consortium will emerge in the financial services industry as a guidepost for future data exchange efforts.
Tony Peccia, Head of Operational Risk at Canadian Imperial Bank of Commerce, Chairman of the Industry Technical Working Group and a member of MORE's Organizing Committee said, "The industry has shown a great deal of collaboration between firms and the regulators in developing these standards. We are very pleased that MORE is continuing to lead the industry's efforts to share operational risk data, and see RMA's involvement as further testament to NetRisk's and MORE's leadership."
About MORE
The Multinational Operational Risk Exchange (MORE) is a non-profit entity that has been endorsed by the Global Association of Risk Professionals (GARP). The activities and affairs of the MORE consortium are controlled by the members who contribute internal loss data for the purposes of capital quantification and benchmarking. The members are responsible for providing leadership to the consortium and for jointly developing with NetRisk and agreeing upon its comprehensive set of data standards. Additional information about MORE is available at www.MORExchange.org
About NetRisk
NetRisk's mission is to bring cost-effective, practical, and leading-edge risk solutions to its clients. It is fulfilling these goals by creating online communities and risk analytic software delivered via the an Internet-based ASP model. Products and services offered by NetRisk include: RiskOps - internet-based operational risk management solution; Crystal Box - interactive performance and risk reporting for the investment professional; and Risk Advisory - enterprise risk management consulting, advice and solutions to the financial services industry. Gene Shanks, the former President of Bankers Trust, founded NetRisk, Inc. in 1997. NetRisk has offices in Greenwich, CT and New York City.
About RMA
RMA was founded in 1914 to help commercial bankers make better lending decisions through the exchange of credit information. Today, RMA is the only professional association that specializes in promoting effective and prudent risk management practices for institutions of all sizes, across the entire financial services industry.
For more information, contact Rob Ceske or Angelina Colombo at MORE/NetRisk +1 203 618-1200. At RMA, contact Pam Martin RMA +1 215 446-4000.