What is the XOI Method?

We are the designers of the XOI methodology, which is adopted by some of the world's leading financial institutions. The XOI approach (Exposure, Occurrence, Impact) decomposes the risk into 3 dimensions.

The number of resources exposed independently to the occurrence of an event. Exposed resources can be employees for fraud, suppliers for disruption, trades for errors, products for mis-selling, etc.

This is the probability of occurrence of the considered event for one particular resource. This probability may depend on the resource itself of the firm controls and on external circumstances.

This is the cost of the event should it occur for one particular resource. This cost is variable and depends on the resource itself, of the firm controls, and on external circumstances.

What our users say

"We believe that there is huge merit for the use of structured scenarios for operational risk management." Conclusion of the Exploring Risk Exposure Methodologies summary report, March 2021.
ORX (Operational Risk Consortium).
The XOI method is the most comprehensive quantitative and analytical framework that I have encountered for the identification, assessment and management of Operational Risk. I have employed it for five years and found it both usable and effective. I recommend this book as essential reading for senior risk managers.
C.S. Venkatakrishnan, CRO, Barclays.
The XOI approach was a 'Eureka!' moment in my journey on operational risk. Coming from a market risk background, I had the impression that beyond the definition of operational risk, it was difficult to find a book that described a coherent framework for measuring and managing operational risk.”
Olivier Vigneron, CRO EMEA, JPMorgan Chase & Co.
The key benefits of the XOI method are to provide an approach to understand, manage and quantify risks and, at the same time, to provide a robust framework for capital modeling. Thanks to this method, we have been able to demonstrate the business benefits of operational risk management. XOI is also well designed to support the Operational Resilience agenda in financial services, which is the new frontier for Op Risk Management.
Michael Sicsic, Head of Supervision, Financial Conduct Authority; Ex-Global Operational Risk Director, Aviva Plc.
The XOI methodology provides a structured approach for the modeling of operational risk scenarios. The XOI methodology is robust, forward looking and easy to understand. This book will help you understand the XOI methodology by giving you practical guidance to show how risk managers, risk modellers and scenario owners can work together to model a range of operational risk scenarios using a consistent approach.
Michael Furnish, Head of Model Governance and Operational Risk, Aviva Plc.
The XOI approach is a simple framework that allows to measure operational risk by identifying and quantifying the main loss drivers per risk. This facilitates the business and management engagement as the various drivers are defined in business terms and not in risk management jargon. Further, the XOI approach can be used for risk appetite setting and monitoring. I strongly believe that the XOI approach has the potential to become an industry standard for banks and regulators.“
Emile Dunand, ORM Scenarios & Stress Testing, Credit Suisse.

Discover the solutions based on the XOI methodology

MSTAR Desktop

The implementation of Exposure, Occurrence and Impact Method for structured risk scenario assessment.

MSTAR Platform

Be informed of what happened. Understand what could happen.

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