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

Mike Ritchie and Matthew Saines





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


The complete history of operational risk regulation (abridged)


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


The painful financial side of NFR


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


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

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


“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


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


Herding cats? NFR divisions as truly diverse units


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

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


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


Old but gold? Mastering the RCSA despite Covid-19


Biases in scenario analyses and how to mitigate them


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


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


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


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


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


Protecting the new gold: Information security


Conduct risk and the impact of Covid-19


From lawsuits to models: Compliance risk and financial crime


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


Managing reputation and stakeholders

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


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


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


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


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

One of the first books we read on risk was Against the Gods: The Remarkable Story of Risk (Bernstein, 1996), which provides a compelling history of the evolution of risk. Unsurprisingly given its title and subject matter, its primary consideration is the nature of risk, how it evolves, and our understanding of topics such as probability and correlation. Much of the book is focused on the human response to risk, and the willingness to take risk, but with only limited attention given to actions taken to control the outcomes of risk.

Against the Gods takes us back to discussions in the coffee shops of London in the late 1600s, where the risks associated with shipping were negotiated and agreed with a risk-balanced commercial outcome, leading to the birth of Lloyd’s of London. More recent developments, such as the Basel Committee on Banking Supervision (BCBS) guidance (eg, Basel II operational risk), have focused heavily on identifying, assessing and understanding risk, with a limited attention or requirement on the formality of controlling risks. The weight of emphasis in Basel II on the attempted measurement of risk that drew so much attention away from effective management of

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