The confusion of Babel: What’s in the name NFR – taxonomy

Mike Finlay and Jodie Ezell

Contents

Foreword

Preface

Introduction

Introduction to Part I: The origins of non-financial risk management

1.

The complete history of operational risk regulation (abridged)

2.

Financial institutions and non-financial risk: Learning from the corporate approach

3.

The painful financial side of NFR

4.

“Risk management is about managing risk” and “It’s all about people”: Psychology might be more important than models

5.

The confusion of Babel: What’s in the name NFR – taxonomy

Introduction to Part II: Governance of non-financial risk management

6.

“It’s the culture, stupid”: Risk culture as the key building block of NFR management – and why some banks have come through the Covid-19 pandemic better than others

7.

Do you know who is who? Three lines of defence in the context of NFR

8.

Herding cats? NFR divisions as truly diverse units

9.

“Just do it!”: Partially self-organising governance structures for NFR frameworks

Introduction to Part III: Tools and instruments for non-financial risk management

10.

A risk by any other name: Identification, classification and agendas

11.

Old but gold? Mastering the RCSA despite Covid-19

12.

Biases in scenario analyses and how to mitigate them

13.

When scenarios are not severe enough: Stress testing for non-financial risk

14.

Ending NFR in NFR: From Excel sheets to professional IT systems for NFR management

15.

Breaking up with risk management: Using the power of controls for good not the prevention of evil

Introduction to Part IV: Focus areas of non-financial risk management

16.

It won’t be over after Covid-19: Pandemics and operational resilience

17.

Dealing with IT complexity and innovation: Delivering business resilience and customer outcomes

18.

Protecting the new gold: Information security

19.

Conduct risk and the impact of Covid-19

20.

From lawsuits to models: Compliance risk and financial crime

21.

Others are doing it cheaper: But can they really? Opportunities and risks in outsourcing

22.

Managing reputation and stakeholders

Introduction to Part V: The future of non-financial risk management

23.

ESG risk as a new (and very important) trigger for NFR

24.

Looking into the crystal ball: What will NFR management look like in 2030?

25.

This time will be different: An alternative future of NFR management

26.

Right time, right place: The drive for change in operational and non-financial risk

“But all this language gotten, and augmented by Adam and his posterity, was again lost at the tower of Babel, when by the hand of God, every man was stricken for his rebellion, with an oblivion of his former language”, The Moral and Political Works of Thomas Hobbes of Malmesbury, 1750

The biblical story of the tower of Babel is a common analogy employed to explain the use of a taxonomy at conferences, in training courses and in publications. The objective is to illustrate how data chaos can be tamed and transformed into order through a single language. However, such use obscures the actual thrust of the story – mankind sought to become a deity and as punishment lost individuality of language, resulting in a single language that no one wanted to listen to or understand.

The potential for the concept of a taxonomy to be the single language is marred by the corresponding issues of the appropriate target audience(s) neither wishing to listen nor having the ability to understand, further compounded by many different, often conflicting, needs for the taxonomy in question.

WHAT IS A TAXONOMY?

The term taxonomy is derived from ancient Greek, specifically the words τάξις or taxis

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