The Role of Open Risk Manual Taxonomies
A taxonomy is the categorization of concepts. It can be a very useful tool in supporting effective knowledge management. Fundamentally a taxonomy is a scheme of classification, typically a hierarchical classification, in which things or concepts are organized into groups or types of increasing specificity.
Mathematically, a hierarchical taxonomy is a tree structure of classifications for a given set of objects. It is sometimes also named a containment hierarchy. At the top of this structure is an encompassing classification, the root node, that includes all objects or concepts that are part of the taxonomy. Nodes below this root are more specific classifications that apply to subsets of the total set of classified objects.
The Open Risk Manual uses various taxonomies to organize its various entries. Those are generally implemented through its category system, which starts with the Root category to which all entries below.
An overview of all specific embedded taxonomies is given through the Taxonomy Category Page. Of course central role in the Open Risk Manual is played by the Risk Taxonomy that helps organize a large number of risk management related topics. Taxonomies are not all created equal and there are significant challenges in creating a structure that fulfils its role properly, especially when the concepts included in the taxonomy are not well-defined themselves.
Notable taxonomies embedded in the Open Risk Manual include:
- The NACE Classification of economic sectors
- The ISCO Classification of professions
- The EU Sustainable Finance Taxonomy
The Common Procurement Vocabulary
The first of the two new taxonomies now integrated in the Open Risk Manual is the Common Procurement Vocabulary. It is the European statistical classification of goods and services procured by the public sector (established by law as the applicable taxonomy to classify tenders). The CPV consists of a Main Vocabulary and a Supplementary Vocabulary, both available in 22 official EU languages. The Main Vocabulary currently consists of about 9454 terms, listing goods, works and services commonly used in public Procurement.
The CPV does not offer a structured description for each code, the scope of each term must be inferred from the string (text) comprising its name. The CVP name text contains parts (or combinations) of information, such as the main name of a product and its type, and sometimes other details. The CPV system is hierarchical with the following overall shape:
- 45 Divisions
- 272 Groups
- 1002 Classes
- 2379 Categories
- 5756 Sub-categories
With the inclusion in the Open Risk Manual users can search and cross-reference any of activities described in the CPV vocabulary.
The EU Financial Competence Framework
The second addition concerns the EU Financial Competence Framework (for Adults). In 2021 the European Commission and the OECD-INFE (OECD International Network for Financial Education) started a collaboration to develop a joint EU/OECD-INFE financial competence frameworks for adults. The objective of the EU/OECD-INFE financial competence framework for adults is to promote a shared understanding of financial competences for adults amongst EU Member States and national authorities, educational institutions, industry and individuals. In addition, it provides a basis for a more coordinated approach among EU and national policymakers. By supporting efforts to improve financial literacy, the framework aims at contributing to the overall goal of improving individual financial well-being.
The framework focuses on competences pertaining to personal finance. It adopts the following broad Content Areas:
- Money and Transactions. This content area covers the knowledge, skills and attitudes related to: the different forms of money and currencies; income; prices, payments and purchases; and the importance of financial records and contracts.
- Planning and Managing Finances. This content area covers the knowledge, skills and attitudes related to budgeting; managing income and expenditure; saving; investing; longer term planning; retirement; credit; debt and debt management.
- Risk and Reward. This content area covers the knowledge, skills and attitudes related to the identification of risks; financial safety nets; insurance; and balancing risk and reward.
- Financial Landscape. This content area covers the knowledge, skills and attitudes related to regulation and consumer protection; rights and responsibilities of consumers; the use of financial education, financial information and financial advice; financial products and services; scams and fraud; understanding of tax and public spending; and external influences on financial decisions.
With the inclusion of the Financial Competence Framework taxonomy the objective is to cross-reference topics relevant for Financial Literacy and related competences with the rest of the Open Risk Manual content.