The Three Dimentions
Understanding 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.
Exposure — The Resource Pool
The number of resources independently exposed to an event. Examples include employees for fraud, suppliers for disruption, trades for errors, and products for mis-selling.
- Employees exposed to fraud & conduct risk
- Key suppliers driving service disruption
- Transactions subject to processing errors
- Products at risk of mis-selling
X
Occurrence — The Probability
The probability that an event occurs for any single exposed resource. This probability captures internal controls, loss history, the characteristics of the resource, and external circumstances.
- Modelled via Bayesian networks
- Control effectiveness scoring
- Historical incident data calibration
- Expert elicitation
O
Impact — The Cost
The financial cost if the event occurs for one particular resource. Variable and dependent on the resource's characteristics, circumstances and mitigation mechanisms.
- Direct financial loss
- Remediation cost
- Loss of revenue
- Loss or damage of assets
- Regulatory fine
- Compensation or restitution to claimants
I
The Book
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