A loss data consortium is a group of financial institutions that has agreed to pool its loss data, according to defined reporting levels and category definitions. The RiskBusiness Loss Data Consortium Service allows participating firms to view both individual loss event reports as well as aggregate loss data summaries, and to do so without compromising the identity of any data contributors.

This permits the examination of rare/extreme events that may have particular relevance in capital modelling or general risk management, a capability not available from consortia whose reporting is limited to aggregate information only. The Loss Data Consortium Service platform is also exceptionally flexible, allowing each group of participants to extensively customise the details of its submission protocol. Thus, a specific installation can be tailored to meet the local risk tracking needs of particular regions, economies, products, service-types or entity types.

As regulators implement the Basel II accord in various jurisdictions, the role of loss data consortia has increased in importance, and undoubtedly will continue to do so. By forming such combinations (typically led by a local regulatory body or association, acting as data guardian), local groups of financial services firms may develop immediate snapshots of all loss data available within their groups, providing an improved basis for setting capital retention standards suitable to a local business environment.

RiskBusiness has consulted extensively with regulatory bodies, industry associations and single financial institutions to establish the recording parameters and data protocols incorporated in the Loss Data Consortium Service. Our guiding design principle has been to recognise that each consortium has individual needs and preferences, and to flexibly accommodate these needs.

The Loss Data Consortium Service addresses a persistent criticism of Basel II model: specifically, that it unfairly advantages larger institutions with more extensive internal data records, or with resources to participate in more expensive, global consortia. The Loss Data Consortium Service, by comparison, permits the formation of local, regional, or peer group consortia on a cost-efficient basis, and with minimal administrative burden.

Key Features of the Loss Data Consortium Service:

• Employs a classification taxonomy decided upon by the members;
• Customised data submission frequencies, ranging from real-time to periodic;
• Fully automated data quality assurance and data analysis, requiring no manual intervention except for resolution of specific data irregularities;
• Supports currency conversion and data scaling (optional);
• Fully parameterised to ensure a bespoke solution for specialized consortium needs, with the level of available data and content detail decided on by the members;
• Comprehensive suite of analytical reports, according to subscription level

For additional information on the RiskBusiness Loss Data Consortium Service, please click [here], click [here] to contact a RiskBusiness representative, click [here] to make an online enquiry, or email us on info@riskbusiness.com.