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 also an emergence of new threats such as: cyber and conduct risk; a refocusing 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 50% of their economic capital allocated to this risk portfolio. In this exciting new Risk Books title – the first book dedicated to NFR – Thomas Kaiser (Professor Kaiser Risk Management Consulting and Goethe University) has curated chapters from 41 authors in senior positions at leading banks, insurance companies and consultancies (including Allianz, Deutsche Bundesbank, Commonwealth Bank of Australia, Deutsche Bank, HSBC and ORX), as well as from across academia. 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. This book not only demonstrates the various components of non-financial risks, and highlights the state-of-the-art approaches for their management, but shows 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 five parts, each with an illuminating introduction written by the editor: 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: 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 real-world management techniques. Part 4 – Focus Areas of Non-Financial Risk Management: 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 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 (3rd line of defence) vantage point, wanting to better understand where non-financial risk came from and where it is heading to.
