Risk Management at the Top – A Guide to Risk and its Governance in Financial Institutions

<p>About the Author xiii</p>
<p>1 Introduction 1</p>
<p>1.1 Introduction 2</p>
<p>1.2 Boards 3</p>
<p>1.3 Why Now? 5</p>
<p>1.4 Rest of the Book 7</p>
<p>Further Reading 9</p>
<p>PART I RISK OVERSIGHT 11</p>
<p>2 Risk An Overview 15</p>
<p>2.1 Terminology 16</p>
<p>2.2 Role of Banks and Risk 22</p>
<p>2.3 Sources of Risk and Uncertainty 25</p>
<p>2.4 Capital 28</p>
<p>2.5 Issues to Consider 34</p>
<p>Further Reading 35</p>
<p>3 Risk Oversight 37</p>
<p>3.1 Introduction 38</p>
<p>3.2 Perspective 39</p>
<p>3.3 Models 43</p>
<p>3.4 Risk Framework 45</p>
<p>3.5 Biases 54</p>
<p>3.6 Issues to Consider 56</p>
<p>Further Reading 57</p>
<p>4 Risk Management 59</p>
<p>4.1 Introduction 60</p>
<p>4.2 Terminology and Components 61</p>
<p>4.3 Risk Management Cycle 65</p>
<p>4.4 Issues to Consider 73</p>
<p>Further Reading 74</p>
<p>5 Risk Appetite 75</p>
<p>5.1 Introduction 76</p>
<p>5.2 Terminology and Concept 77</p>
<p>5.3 Stakeholders 79</p>
<p>5.4 Expressions of Risk Appetite 82</p>
<p>5.5 Framework 87</p>
<p>5.6 Risk Reporting 91</p>
<p>5.7 Issues to Consider 94</p>
<p>Further Reading 95</p>
<p>6 RiskCulture 97</p>
<p>6.1 Introduction 98</p>
<p>6.2 Terminology 100</p>
<p>6.3 Assessing and Influencing Risk Culture 108</p>
<p>6.4 Monitoring Risk Culture 117</p>
<p>6.5 Issues to Consider 118</p>
<p>Further Reading 119</p>
<p>PART II SPECIFIC RISKS 121</p>
<p>7 Credit Risk 125</p>
<p>7.1 Introduction 126</p>
<p>7.2 Definition of Credit Risk 127</p>
<p>7.3 Framework 130</p>
<p>7.4 Risk Appetite Metrics 134</p>
<p>7.5 Credit Risk Management 149</p>
<p>7.6 Issues to Consider 158</p>
<p>Further Reading 158</p>
<p>8 Market Risk 159</p>
<p>8.1 Introduction 160</p>
<p>8.2 Definition of Market Risk 161</p>
<p>8.3 Market Risk Framework 164</p>
<p>8.4 Market Risk Estimation 171</p>
<p>8.5 Market Risk Management 183</p>
<p>8.6 Issues to Consider 188</p>
<p>Further Reading 188</p>
<p>9 Operational Risk 191</p>
<p>9.1 Introduction 192</p>
<p>9.2 Definition of Operational Risk 193</p>
<p>9.3 Operational Risk Framework 196</p>
<p>9.4 Operational Risk Estimation 202</p>
<p>9.5 Operational Risk Management 208</p>
<p>9.6 Issues to Consider 213</p>
<p>Further Reading 214</p>
<p>10 Liquidity Risk 215</p>
<p>10.1 Introduction 216</p>
<p>10.2 Definition of Liquidity Risk 217</p>
<p>10.3 Liquidity Risk Framework 220</p>
<p>10.4 Liquidity Risk Measurement 224</p>
<p>10.5 Liquidity Risk Management 229</p>
<p>10.6 Issues to Consider 233</p>
<p>Further Reading 234</p>
<p>11 Other Risks 235</p>
<p>11.1 Introduction 236</p>
<p>11.2 Reputational Risk 237</p>
<p>11.3 Strategic Risk 239</p>
<p>11.4 Business Risk 241</p>
<p>11.5 Other Market Risks 242</p>
<p>11.6 Model Risk 244</p>
<p>11.7 Supplier Risk 247</p>
<p>11.8 Resources 249</p>
<p>11.9 Issues to Consider 251</p>
<p>Further Reading 252</p>
<p>12 Risk Interactions 253</p>
<p>12.1 Introduction 254</p>
<p>12.2 Risks as Frequency and Severity Drivers 256</p>
<p>12.3 Risk Interactions 259</p>
<p>12.4 Implications for Risk Management and Measurement 266</p>
<p>12.5 Issues to Consider 269</p>
<p>Further Reading 269</p>
<p>PART III REGULATORY ENVIRONMENT 271</p>
<p>13 Regulatory Environment 275</p>
<p>13.1 Introduction 276</p>
<p>13.2 Structure of Prudential Regulatory Process 277</p>
<p>13.3 Scope of Prudential Regulation 286</p>
<p>13.4 Regulatory Influence 299</p>
<p>Further Reading 303</p>
<p>Disclaimer Regarding Excerpts from S&amp;P Materials 305</p>
<p>Index 307</p>