Managing non-financial risks: A new focus area for executive and non-executive board members

Abstract

Non-financial risks have led to severe losses over the past decades, which demonstrates the need for banks to re-evaluate their risk management frameworks. This paper discusses key features of non-financial risks — contrasted with more familiar financial risks — and the level of preparedness of banks to effectively deal with them. Suggested approaches to deal with non-financial risks from a governance, methodology and process perspective are discussed.