Non-Financial Risk Management: Emerging stronger after COVID-19

Managing non-financial risks (NFRs) has never been more critical to a firm’s success. Since the global financial crisis, markets have not only seen an unprecedented expansion of financial regulation, but an emergence of new threats such as cyber and conduct risk; a refocussing of policy-making and regulation around ESG; and of course the impact of Covid-19. In response, NFR has now become one of the most important areas of focus for financial institutions, with some banks having more than fifty percent of their economic capital allocated to this risk portfolio. In this exciting new Risk Books’ title – the first book dedicated to NFR – Prof. Thomas Kaiser (Professor Kaiser Risk Management Consulting and Goethe University), has gathered together 41 authors who hold senior positions at leading banks, insurance companies, consultancies and from across academia (including Allianz, Bundesbank, Commonwealth Bank of Australia, Deutsche Bank, HSBC and ORX). Non-financial Risk Management instils in the reader a greater understanding of the complex relationships between the components of NFRs through the real-world experience of the authors. The aim of this book is to not only demonstrate what the various components of non-financial risks are, or to highlight the state-of-the-art approaches for its management, but to show what can be learned from a risk-mitigation perspective (including, but not limited to Covid-19), allowing readers to better implement efficient and effective methods and processes. The 26 chapters are divided into 5 parts, with an illuminating introduction written for each part from the editor, Thomas Kaiser: Part 1 - The Origins of Non-Financial Risk Management; a look at the history of NFR, starting with Basel and Enterprise Risk Management and moving through the psychology of NFR and finally to its taxonomy. Part 2 - Governance of Non-Financial Risk Management; chapters in this section cover risk culture, the three lines of defence and agile governance structures. Part 3 - Tools and Instruments for Non-Financial Risk Management; risk mitigation is looked at in depth and chapters elucidate on real-world management techniques. Part 4 - Focus areas of Non-Financial Risk Management; take a deep dive into information security, conduct risk, reputational risk, financial crime, and more. Part 5 - The Future of Non-Financial Risk Management; chapter authors gaze ahead and predict which NFRs will be tomorrow’s hot topics. This title is aimed at regulators, academics, auditors, consultants or anyone working within risk management, either from a risk-taker (1st line of defence), risk oversight (2nd line of defence) or auditing vantage point (3rd line of defence), wanting to better understand where non-financial risk came from and where it is heading to.