Many organizations are realizing the critical need to quantify Non-Financial Risk (NFR) and contextualize Financial Risk, recognizing the challenges posed by their interplay. Identifying and assessing risks against risk appetite lays the foundation for effective risk management. But managing NFR involves implementing comprehensive risk management frameworks, and internal controls, ensuring compliance with regulations, making technology investments, and planning for employee development to safeguard the institution's operations and reputation. In parallel, quantifying NFR enables a thorough evaluation of potential risk exposure and the prioritization of risks for more insightful analyses. As regulatory expectations increase, contextualization becomes increasingly vital, enhancing the effectiveness of boards overseeing financial institutions. Most importantly, the emphasis on integrating both NFR and FR insights to make more informed decisions, combining quantitative and qualitative approaches for a holistic understanding of risks cannot be overemphasized. This comprehensive approach aims to achieve better outcomes and effective risk management for financial institutions. Download this presentation by Daniël Smidts, where he shares the significance of contextualizing Financial Risk management, considering the dynamic regulatory landscape and the need for an integrated view of risks and opportunities. https://corporater.com/en/corporater-financial-services-software/?cmc=NFR_SD_SL&utm_source=social&utm_medium=NFR_SD_SL

1. Director GPRC, Financial Services
Institutions, Corporater
Daniël Smidts
Quantifying
Non-Financial Risk
and contextualized
Financial Risk is what
brings value.

2. Risk management is at the
heart of every successful
financial institution. The
intricate relationship between
Non-Financial Risk (NFR) and
Financial Risk (FR) creates a
challenging landscape that
demands meticulous
attention and strategic
finesse.

3. Having an integrated view across
financial risk and non-financial risk
will enable an institution to make
better decisions that lead to better
outcomes. This requires both
quantitative and qualitative
insights in both areas.
Ultimately integrating
NFR&FR

4. FR NFR
Dashboard / Cockpit
Contexualized & quantified risk insight enables better
decision making, achieving better outcome while managing
risks effectively.
Performance objectives
Market Governance
Quantification
Contextualized
Credit Risk
Liquidity Compliance
Financial Risk Non Financial Risk

5. Identify where the material risks
to your business exist and assess
against your risk appetite.
Understand how much information is
available to help manage them so you
can start analyzing both probability
and severity.
Identify Risks

6. It's important for banks to have
comprehensive risk management
strategies in place to protect their
operations and reputation. Managing
NFR involves implementing effective risk
management frameworks, conducting
regular risk assessments, and
establishing strong internal controls to
ensure compliance with laws and
regulations. In addition investing in
robust technology infrastructure, proper
training, and developing employees are
equally important to monitor and
mitigate potential risks.
Managing
Non-Financial Risk (NFR)

7. Quantifying NFR enables you to
compare and prioritize risks based
on total exposure and run more
insightful analyses (e.g. ROI of risk
program, sensitivity studies, control
cost-effectiveness analyses).
Furthermore, it enables assessment
of the total potential exposure to
risks and aggregate risks and finds
the combined exposure of multiple
risks.
Quantifying NFR

8. Financial institutions must be on the
lookout for credit, liquidity, and market
risks. The scope and extent to which an
institution needs to manage financial
risk are continuously impacted by
changing market conditions, regulatory
requirements, and emerging risks in
general.
Managing
Financial Risk (FR)
$

9. Managing financial risk in a bank
is a complex and ongoing process.
The need to contextualize
(the outcome of) financial risk
management is becoming
increasingly important. Boards
become more effective when
financial risk is contextualized as it
provides anintegrated view of both
financial and non-financial risks
and opportunities.
The need to contextualize
Financial Risk

10. »
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