Annexure 2: Detailed Loss Event Type Classification

Effective from Dec 28 2022 - Dec 31 2022
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Detailed loss event type classification
Event-type category (Level 1)	Definition	Categories (Level 2)	Activity examples (Level 3)
Internal Fraud.	Losses due to acts of a type intended to defraud, misappropriate property or circumvent regulations, the law or company policy, excluding diversity/ discrimination events, which involves at least one internal party.	Unauthorized Activity	Transactions not reported (intentional).
			Trans type unauthorized (with monetary loss).
			Mismarking of position (intentional).
		Theft and Fraud	Fraud / credit fraud / worthless deposits.
			Theft / extortion / embezzlement / robbery.
			Misappropriation of assets.
			Malicious destruction of assets.
			Forgery.
			Check kiting.
			Smuggling.
			Account take-over / impersonation.
			Tax non-compliance / evasion (willful).
			Bribes / kickbacks.
			Insider trading (not on firm's account).
External Fraud.	Losses due to acts of a type intended to defraud, misappropriate property or circumvent the law by a third party.	Theft and Fraud	Theft/ Robbery.
			Forgery.
			Check kiting.
		Systems Security	Hacking damage.
			Theft of information (with monetary loss).
Employment Practices and Workplace Safety.	Losses arising from acts inconsistent with employment, health or safety laws or agreements, from payment of personal injury claims, or from diversity / discrimination events.	Employee Relations	Compensation, benefit, termination issues.
			Organized labor activity.
		Safe Environment	General liability (slips and falls, etc.).
			Employee health & safety rules events.
			Workers compensation.
		Diversity and Discrimination	All discrimination types.
Clients, Products and Business Practices.	Losses arising from an unintentional or negligent failure to meet a professional obligation to specific clients (including fiduciary and suitability requirements), or from the nature or design of a product.	Suitability, Disclosure, and Fiduciary	Fiduciary breaches / guideline violations.
			Suitability / disclosure issues (know-your-customer, etc.).
			Retail consumer disclosure violations.
			Breach of privacy.
			Aggressive sales.
			Account churning.
			Misuse of confidential information.
			Lender Liability.
		Improper Business or Market Practices	Antitrust.
			Improper trade / market practices.
			Market manipulation.
			Insider trading (on firm's account).
			Unlicensed activity.
			Money laundering.
		Product Flaws	Product defects (unauthorized, etc.).
			Model Error.
		Selection, Sponsorship, and Exposure	Failure to investigate client per guidelines.
			Exceeding client exposure limits.
		Advisory Activity	Disputes over performance of advisory activities.
Damage to Physical Assets.	Losses arising from loss or damage to physical assets from natural disaster or other events.	Disasters and Other Events	Natural disaster losses.
			Human losses from external sources (terrorism, vandalism).
Business Disruption and System Failures.	Losses arising from disruption of business or system failures.	Systems	Hardware.
			Software.
			Telecommunications.
			Utility outage / disruptions.
Execution, Delivery, and Process Management.	Losses from failed transaction processing or process management, from relations with trade counterparties and vendors.	Transaction Capture, Execution, and Maintenance	Miscommunication.
			Data entry, maintenance or loading error.
			Missed deadline or responsibility.
			Model / system miss-operation.
			Accounting error / entity attribution error.
			Other task miss-performance.
			Delivery failure.
			Collateral management failure.
			Reference Data Maintenance.
		Monitoring and Reporting	Failed mandatory reporting obligation.
			Inaccurate external report (loss incurred).
		Customer Intake and Documentation	Client permissions / disclaimers missing.
			Legal documents missing / incomplete.
		Customer/Client Account Management	Unapproved access given to accounts.
			Incorrect client records (loss incurred).
			Negligent loss or damage of client assets.
		Trade Counterparties	Non-client counterparty miss-performance.
			Miscellaneous non-client counterparty disputes.
		Vendors and Suppliers	Outsourcing.
			Vendor disputes.