Advanced Operational Risk Group (AORG) AKA Advanced Measurement Group (AMAG)

AORG was formed in 2005 as the AMA Group by the Risk Management Association (RMA) at the suggestion of senior U.S. regulators. The RMA is a member-driven professional association that serves to advance the use of sound risk management principles in the financial services industry. 

AORG’s more specific focus is on advancing the operational risk measurement and management discipline.  The Group’s mission is (1) to foster a dialogue with the federal U.S. financial services regulatory agencies, and (2) share industry views on advanced operational risk measurement and management, including those aspects of CCAR / DFAST. In support of its mission, AORG conducts regular practice-sharing exercises among members, including its sponsorship of a series of working groups, periodic range-of-practice surveys, and roundtable discussions.

The Group consists of operational risk management professionals working at financial service organizations operating and regulated in the United States.  Institutional membership in the AORG is by arrangement with RMA, and is open to any financial firm regulated in the U.S. that is pursuing advanced op risk measurement and management practices, and/or is required to conduct CCAR / DFAST exercises. A senior officer responsible for operational risk management serves as the primary representative of each member institution on the AORG.

Since its inception, the Group has supported advanced operational risk management and the fundamental goals of improving operational risk management practice and ensuring capital adequacy. To achieve these goals AORG has promoted the view that regulatory agencies must address two broad themes as they implement both policy development and supervisory and examination practice.  They are that:  (1) Operational risk regulation should remain principles-based vs. prescriptive in nature; and (2) A proper balance between management and measurement should be maintained. 

AORG impact to date:

  • Senior staff members at U.S. regulatory agencies have been receptive to the key messages from AORG ; our cornerstone executive summary, AMA Implementation (PDF), argues for principles-based supervision and supervisory balance between measurement and management.
  • The Interagency Operational Risk Working Group (more recently, the AMA-BQT) has welcomed AORG on a regular basis with a focus on transitioning tangible issues from policy to supervision which, from AORG members' perspective, is most important at this stage.
  • AORG has received positive feedback from senior agency officials on the group's Capital Estimation and Scenario Analysis Range-of-Practice papers, and more recent Industry Position papers (IPPs) and discussions on various "Thorny" Loss Distribution Approach topics, Scenario Analysis and Validation, and other topics. Their comments have indicated that the papers have been very helpful in support of the industry-regulatory implementation dialogue and enhanced understanding.

 AORG Activity Highlights

  • Ongoing watch briefs and group networking.
  • Regular meetings and discussions with U.S. agency representatives.
  • AMA Validation Practices, an industry white paper (2014).
  • Periodic topical round tables; recent examples include those dedicated to developments in BEICF (2015), Risk Drivers (2014), Risk Appetite and Challenge (2014), Validation (2013 & 2014), and CCAR (2013).
  • AORG 2014, 2013, 2012, 2011, 2010, and 2008 Range of Practice (ROP) surveys of the member institutions, covering over 20 categories of both Measurement and Quantification implementation.
  • AORG Quant Challenges: Thorny Topics IPP (July 2013).
  • Industry Position Paper on Scenario Analysis: Practices (December 2012).
  • Industry Position Paper on Scenario Analysis: Perspectives and Principles (May 2012).
  • Refresh of Industry Position Paper (IPP) on Unit of Measure & Dependence (August 2011).
  • Active subgroups in the areas of Data, Capital Models, Scenario Analysis, and Validation (November 2010 to date).
  • Responses to SIGOR Consultation Documents on sound practices and supervisory guidance (February 2011) and on the use of insurance for risk mitigation (February 2010).
  • Previous surveys, discussions, and development of AORG industry position papers on BEICF, Unit of Measure and Dependence, and ICAAP (May 2008–April 2009).
  • Review and index to the Final U.S. Rule (November 2007).
  • Ongoing discussions about examination and supervision (June 2007 to date).
  • AORG extensive Range-of-Practices survey and paper on Scenario Analysis (May-December 2007).
  • AORG Response to the U.S. Proposed Supervisory Guidance (May 2007).
  • AORG white paper and Executive Summary on Capital Estimation Range of Practices (August–December 2006), based on an extensive survey of member practices.
  • Review and analysis of the notice of proposed rulemaking (NPR): collated members' assessment of priority issues for discussion; developed and released AORG response (March, 2006–March 2007).
  • Review and commentary on AIGOR's Range of Observed Practices (June 2006).
  • Development and release of white paper, AMA Implementation; meetings with key agency officials (2005).

The group has engaged in numerous meetings/discussions with key agency representatives, including, but not limited to, meetings with the following (more recent sessions listed first and then in alphabetical order):

  • Comptroller Curry (2014); Comptroller Dugan (2005).
  • The U.S. Interagency AMA-BQT (formerly the IORWG) and/or SIGOR (formerly the AIGOR) (2014, 2013, 2012, 2011, 2008, 2007, and 2006).
  • Carolyn DuChene, Deputy Comptroller of the OCC (2014, 2013, 2012, and 2011) Kevin Bailey, Deputy Comptroller of the OCC and Chair of SIGOR (2011, 2010, 2009, and 2007).
  • Steven Fay, BQT Leader and Senior Professional, Supervision, Regulation and Credit, FRB Boston (2014).
  • Kenneth Fulton, Operational Risk and Basel Advisor, OCC, and formerly of the FRB (2014, 2013, 2012, 2011, and 2009).
  • David Jones, Chair, Basel Coordinating Committee and Senior Advisor, Banking Supervision and Regulation, Board of Governors (2014 and 2012).
  • Marco Migueis, Economist, Policy, Banking Supervision & Regulation, FRB (2014 and 2012).
  • Hema Parekh, AMA Basel Qualification Team Co-Lead and Senior Professional, Federal Reserve Bank of Richmond (2014).
  • Carlos Sosa, Supervisory Financial Analyst, Policy, Banking Supervision & Regulation, FRB (2014, 2013, and 2012).
  • Robert Stewart, AMA Basel Qualification Team Co-Lead and Risk Consultant and Risk Specialist, Federal Reserve Bank of Chicago (2014 and 2012).
  • John Walsh, Senior Bank Examiner, FRBNY (2013 and 2012).
  • Alfred Seivold, Senior Examination Specialist, FDIC (2013, 2012, 2011, and 2009).
  • Eric Caban, AVP, FRB–New York (2012 and 2011).
  • Adrienne Haden, Assistant Director, Operational Risk, FRB (2012, 2011, and 2009).
  • Evan Sekeris, FRB–Richmond (2012 and 2009).
  • Bakhodir Ergashev, Operational Risk Quantitative Examiner (2012).
  • Eric Rosengren, Patrick deFontnouvelle, and the Federal Reserve Board Boston Quantitative Analysis Team (2011, 2010, 2009, 2008, and 2005).
  • Roger Cole, Director of Banking Supervision and Regulation at the FRB (2008, 2007, and 2005).
  • Jeanmarie Davis SVP, Manager of Large Complex Banking Organizations Department, FRBNY (2008).
  • Former Fed Governor Susan Bies, former Vice Chairman Roger Ferguson, and senior staff at the Federal Reserve Board (2005).
  • Other staff members from the Federal Reserve, Office of the Comptroller of the Currency, Federal Deposit Insurance Corporation, and/or the Office of Thrift Supervision (2005-2014).

Industry Position Papers

During 2008–2014, AORG has been engaged in the development of a series of Industry Position Papers (IPPs) as a means of fostering a productive dialogue between the industry and the regulatory agencies in the U.S. about the practical implementation of the specifics of AMA. Most recent instances begin with surveys of members to capture key issues. Then a series of AORG and individual discussions are typically held to attain greater clarity about industry practices. More formal surveys and round-table discussions follow. Industry position papers result from the process, as warranted.

Papers in this series include:

Of the institutions that are currently regulated in the U.S. (viewed as mandatory or opt-in Basel II institutions); 23 are currently members of AORG . They are listed below:

  • Bank of America
  • Bank of the West
  • BMO Financial
  • BNY Mellon
  • Capital One Bank
  • Citigroup
  • Credit Suisse
  • Deutsche Bank
  • Goldman Sachs
  • HSBC North America
  • JP Morgan Chase
  • Keycorp
  • M&T Bank
  • Morgan Stanley
  • MUFG Union Bank
  • Northern Trust
  • PNC Financial
  • Royal Bank of Canada
  • State Street
  • TD Bank Financial Group
  • Truist
  • U.S. Bank
  • Wells Fargo

The Risk Management Association (RMA) provides the support team and facilitation for the AORG.

Contacts for further Information

Ed DeMarco, Member, AORG
RMA General Counsel and Director of Operational Risk
The Risk Management Association

Sylwia Czajkowska, Member, AORG
Associate Director of Operational Risk
The Risk Management Association

Douglas G. Hoffman, Facilitator, AORG
Operational Risk Advisors LLC