What is Risk Taxonomy?
A risk taxonomy is a structured framework that defines and categorises the risks an organisation faces. In financial services, it groups risks into categories such as conduct, operational, financial crime, regulatory and technology risk, with each category broken down into specific risk types. A clear taxonomy gives firms a shared vocabulary for identifying, measuring and reporting risk consistently across teams and systems.
Risk Taxonomy in financial services
In financial services, a risk taxonomy gives compliance and risk teams a common structure for classifying what they find, from conduct risk to customer vulnerability. When AI is used to review interactions, mapping its findings to the firm's taxonomy makes them consistent, reportable and easier to act on.