Emerging Practices for Capital Adequacy © Copyright 2003, CCRO. All rights reserved. 42 6.6 Summary It is essential that companies recognize that operative risk consumes capital and that it must be addressed in a comprehensive and effective manner. Currently, no “best practice” exists given not only the modeling and data constraints but also the nascent nature of the field. By combining different classification, measurement, and mitigation techniques, companies can start to assess the effects of operative risk on their capital requirements by creating a formal framework for assessing the risk. As stated, the CCRO recommends creating a “risk taxonomy” as a long-term solution, coupled with the development of an internal rating-based scorecard, as the first step toward including operative risk as part of economic capital.