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Jul 26, 2016 · Banks are accustomed to taking on financial risk and generating profit from it. It is the premise of their business models. But nonfinancial risk (NFR), whether related to compliance failures, misconduct, technology, or operational challenges, has only a downside. And the downside is large. Foremost are the financial consequences.
Non-financial risks (NFR) are all of the risks which are not covered by traditional financial risk management. [1] This negative definition resembles the initial definition of operational risk, and it depends on the bank or corporation whether or not they use the term
Jul 1, 2023 · Non-financial risk is operational and strategic risk. These can be summarised as operational risk (including HR, culture & conduct, IT, data & cyber, business disruption, fraud, legal & compliance, assets, and infrastructure), and strategic risk.
Sep 9, 2024 · What is non-financial risk? Non-financial risk (NFR) works on an exclusionary basis; in that the term encompasses all of an organizations’ threat events except for those with a direct link to finances.
Feb 28, 2022 · Nonfinancial risks arise from the bank’s operations (processes and systems) and are similar to risks faced by companies outside the financial sector (“corporates”). Over time, corporates have developed approaches to address nonfinancial risk while adapting approaches developed by banks to manage financial risk, which corporates also face.
For this review, ASIC’s Corporate Governance Taskforce adopted a definition of non-financial risk that aligns with the definition APRA used during its prudential inquiry into CBA 1. This definition captures operational risk, compliance risk, and conduct risk.
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A simple definition is that all risk types, excluding credit, market, interest rate and liquidity risk, are considered to be NFR, including operational, regulatory, environmental, social and governance (ESG), strategic and business risks, to name a few.
