Risk Governance: Biases, Blind Spots and Bonuses

Cover
Half Title
Series Page
Title Page
Copyright Page
Dedication Page
Contents
List of figures
List of tables
Biography
Foreword
Preface
Part A Foundations of risk governance
1 Emergence of risk governance
1.1 Risk management and regulation
1.2 Biases and blind spots
1.3 Timing and incentives
1.4 Financial institutions as risk governance catalysts
1.5 Conclusion
Notes
2 Structures of risk governance
2.1 Defining risk and risk management
2.2 The role of the board of directors
2.2.1 Risk appetite and strategy
2.2.2 Risk framework and policy
2.2.3 Supervising the executive
2.2.4 Risk accountability
2.3 Board risk committee
2.4 Risk in the executive – chief risk officer
2.5 Risk management function
2.6 Compliance function
2.7 Assurance
2.8 Three lines model (aka three lines of defence)
2.9 Executive compensation
2.10 Risk disclosures
2.11 Evidence for risk governance
Notes
Further reading and resources
3 Assessing and embedding risk culture
3.1 Risk culture/climate versus organisational culture
3.2 Risk culture and risk management maturity
3.3 Measuring risk culture
3.3.1 Observation and interviews
3.3.2 Risk culture surveys
3.3.3 Other data sources
3.4 Building risk culture
3.4.1 Guidance for boards
3.4.2 Speaking up and listening up
Notes
Further reading and resources
4 Incentives and accountability
4.1 Accountability
4.2 Remuneration and performance measurement
4.2.1 Components of executive compensation
4.2.2 Time trends in executive compensation
4.2.3 Controversies in executive compensation
4.2.4 Pay/performance sensitivity
4.2.5 The balanced scorecard and gateways
4.2.6 Deferrals and share-based remuneration
Notes
Part B The risk management process
5 Risk management process overview
5.1 Communication and consultation
5.2 Scope, context and criteria
5.3 Risk assessment
5.4 Risk treatment
5.5 Recording and reporting
5.6 Monitoring and review
6 Communicating and influencing for risk governance
6.1 Dealing with hostility and suspicion
6.2 Dealing with apathy and overconfidence
6.3 Use of storytelling
6.4 Appealing to fear
6.5 General principles
6.6 Quantitative information
Notes
Further reading and resources
7 Context, criteria and risk appetite
7.1 Context
7.1.1 SMEs
7.1.2 Start-ups
7.2 Criteria
7.2.1 Public sector
7.3 Risk appetite
Notes
Further reading and resources
8 Risk analysis
8.1 Quantitative risk analysis
8.1.1 Case study: Larry’s Luxury Food and Wine (with accompanying spreadsheet)
8.2 Analysing risk interactions
8.2.1 Interactions at Singapore Airlines
8.2.2 Interactions at BHP
8.2.3 Credit and operational risk interactions in banking
8.3 Managing model risk
8.4 Subjective risk analysis
Notes
Further reading and resources
9 Risk treatment
9.1 Treatments and their (unforeseen) consequences
9.2 Treating ‘financial risks’
9.3 Operational treatments and flexibility
9.4 Financial flexibility as a risk management strategy
9.4.1 Case study: Larry’s Luxury Food and Wine revisited
9.4.2 Case study: BHP revisited
9.5 Treating multiple risks simultaneously
9.6 Evaluating expensive risk treatments
Notes
Further reading and resources
10 Report, monitor, review
10.1 Link to objectives
10.2 Reporting to line 1
10.3 Board risk reporting
10.4 Monitoring and review
Note
Part C Case studies
11 Volkswagen Dieselgate case
Notes
12 CBA/conduct risk case study
12.1 Governance, culture and accountability at the CBA
Notes
Further reading and resources
13 Strategic risk management
13.1 Strategic risk identification with the PESTLE
13.2 Evaluating strategic risk through scenario analysis
13.3 Treating strategic risk: flexibility and preparedness
13.4 Monitoring and reviewing strategic risk
Notes
Further reading and resources
14 Climate risk management
14.1 Potential strategic responses
14.1.1 Accept
14.1.2 Operational adaptation
14.1.3 Diversification and transition
14.1.4 Divestment
14.1.5 Managed decline
14.1.6 Insurance and other contractual solutions
14.1.7 Financial flexibility
14.2 Governance of climate risk
14.2.1 Board focus
14.2.2 Disclosure
14.2.3 Communication
14.2.4 Incentives
14.2.5 Analysis
Notes
Further reading and resources
15 Cyber risk
15.1 Nature of impact
15.2 Why is cyber risk so challenging?
15.3 Cyber security frameworks
15.4 Insurance
Notes
Further reading and resources
16 COVID-19 pandemic
16.1 Behaviour changes and dread risk
16.2 Financial and operational adaptation
16.3 Rethinking risk management: resilience and adaptability
Notes
Further reading and resources
Risk governance glossary
Index