Non-financial risks, such as operational, reputational or strategic risks, are becoming increasingly important in the risk map of banks compared to more established financial risks. This is partly due to spectacular losses and partly because supervisory authorities and standard setters such as the ECB, EBA and BaFin are increasingly focussing on these risks in their assessments of risk-bearing capacity and in individual special audits.
A standardised governance structure for non-financial risks
The standardisation of methods across sub-categories is the key to higher quality management information and the leveraging of synergies. In the area of risk culture, as a fundamental prerequisite for better management of non-financial risks, the 5th MaRisk amendment will soon give rise to specific integration issues.
The key success factor here is a governance structure that operationalises the "3 Lines of Defence" concept. The large number of categories of non-financial risks and therefore stakeholders creates particular challenges in practical implementation. Great attention must be paid to a strong first line of defence (business and support areas). However, the involvement of risk controlling in the first line of defence beyond standard setting and coaching should be avoided.
Risk strategy and appetite must be incorporated into corporate management at all levels as specific, objectively assessable targets. Risk management for risk categories in the current regulatory focus (e.g. conduct risk, model risk) should be expanded. New freedoms resulting from the abolition of regulatory risk models (AMA) can be used to develop management-orientated models.
Psychology and Risk management
KPMG in-house training on the psychological foundations of NFR management and risk culture
Benefit from our in-depth knowledge and many years of experience
Recognising potential risk areas in good time and continuously developing risk frameworks are becoming increasingly important in view of the constantly growing relevance of the topic and potential areas of loss. In order to achieve this, various analyses and methods can be used to ensure high-quality action management.
We are happy to support you in all of these areas. Contact us and benefit from our extensive experience in setting up or developing future-proof and practical non-financial risk frameworks - from suitable strategies and state-of-the-art governance to methods and processes.
