Non-financial risk: Difference between revisions
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The concept is particularly important for banks and other financial firms where, historically, the management of non-financial risks may in some cases have been neglected. | The concept is particularly important for banks and other financial firms where, historically, the management of non-financial risks may in some cases have been neglected. | ||
:<span style="color:#4B0082">'''''Only a downside'''''</span> | |||
:"Non-financial risk, whether related to misconduct, non-compliance, IT, reputational, cybersecurity or operational challenges, is not linked directly to financial decisions and has only a downside. | |||
:In other words, unlike credit or market risk, here there are only potential losses, which can be large. In addition, non-financial risk can only be reduced or mitigated, but not eliminated, and it is far more difficult to quantify than financial risks. | |||
:Despite all these difficulties, or perhaps because of them, non-financial risk has been on [bank] regulators’ and supervisors’ radar for quite some time. In fact, it’s been more than 15 years since the Basel II capital accord included a capital charge for operational risk." | |||
:''Margarita Delgado, Deputy Governor, Banco de Espana, 2019'' | |||
== See also == | == See also == | ||
* [[Compliance risk]] | |||
* [[Conduct risk]] | |||
* [[Credit risk]] | |||
* [[Cyberrisk]] | |||
* [[Downside risk]] | |||
* [[Financial]] | |||
* [[Financial risk]] | * [[Financial risk]] | ||
* [[Guide to risk management]] | * [[Guide to risk management]] | ||
* [[Market risk]] | |||
* [[Misconduct]] | |||
* [[Operational risk]] | * [[Operational risk]] | ||
* [[Regulatory risk]] | |||
* [[Reputational risk]] | * [[Reputational risk]] | ||
* [[Risk]] | * [[Risk]] | ||
* [[Risk management]] | * [[Risk management]] | ||
* [[Risk mitigation]] | |||
* [[Systemic risk]] | |||
[[Category:Accounting,_tax_and_regulation]] | [[Category:Accounting,_tax_and_regulation]] | ||
[[Category:Identify_and_assess_risks]] | [[Category:Identify_and_assess_risks]] | ||
[[Category:Manage_risks]] | [[Category:Manage_risks]] | ||
[[Category:Risk_reporting]] | |||
[[Category:Risk_frameworks]] | [[Category:Risk_frameworks]] | ||
[[Category: | [[Category:The_business_context]] | ||
Latest revision as of 15:24, 19 August 2024
Risk management - banking - financial firms.
(NFR).
Non-financial risks are all risks that are not financial risks.
The concept is particularly important for banks and other financial firms where, historically, the management of non-financial risks may in some cases have been neglected.
- Only a downside
- "Non-financial risk, whether related to misconduct, non-compliance, IT, reputational, cybersecurity or operational challenges, is not linked directly to financial decisions and has only a downside.
- In other words, unlike credit or market risk, here there are only potential losses, which can be large. In addition, non-financial risk can only be reduced or mitigated, but not eliminated, and it is far more difficult to quantify than financial risks.
- Despite all these difficulties, or perhaps because of them, non-financial risk has been on [bank] regulators’ and supervisors’ radar for quite some time. In fact, it’s been more than 15 years since the Basel II capital accord included a capital charge for operational risk."
- Margarita Delgado, Deputy Governor, Banco de Espana, 2019
