Governance is defined as the way in which a company is controlled, through principles like the equitable treatment of shareholders, the protection of the interests of stakeholders, the ethical behaviour of the board, and the transparency and accountability of both management and the board. It is at the centre of any complex management system which enables a financial institution to function, a system which becomes even more complex when the corporation or company in question is a bank. Such institutions have huge numbers of people sharing in both risks and rewards, thereby implicating many more people in its decisions and potential losses.
A methodology which puts the relationship between risk management and governance at the centre of banking best practice has not yet been established. Risk and Governance: A Framework for Banking Organisations articulates the necessity of devising a new system of risk management which can cope with extreme conditions, examining the intrinsic limitations on governance, the role and evolution of risk management, and the strategies for best practice. Sergio’s contention is that risk management must become the key function of governance and the responsibility of the Board.
This book details the confluence of risk management activities and corporate governance mechanisms in modern banking into one integrated practice. It argues that the two processes, thus far confined respectively to the boardroom and to the back office, are inextricably linked, that their goals are complementary and that one cannot function without the other.
Risk and Governance: A Framework for Banking Organisations analyses the evolution and current thinking behind corporate governance, the rationale behind risk management - how it functions, why we need it, all potential risks faced by banks and the current models used to contend with them – and the necessity of using new models and strategies for banking best practice and corporate governance.
Key chapters include:
The Nature of Corporate Governance in Banking
The Mission, Organisation and Governance of Risk Management
Operations Risk in Extreme Market Conditions
Managing Reputational Risk
A Framework for Risk-Bearing Governance
Risk and Governance: A Framework for Banking Organisations is essential for anyone involved in the organisation and management of risk in a banking environment, from board members, directors, risk managers and regulators, to auditors, consultants, practitioners, and senior members of staff with the power to make strategic decisions.
- Book 9781906348878 / EBook 9781782720270
- Publish date
- 26 Apr 2013
- 155mm x 235mm
Table of contents
Risk and Governance: A Framework for Banking Organisations
Introduction: The Confluence of Risk and Governance
Part 1: Corporate Governance in Banking
Chapter 1: Corporate Governance, Information and Control
Chapter 2: The Nature of Corporate Governance in Banking
Chapter 3: Regulation and Governance
Part 2: Modern Risk Management
Chapter 4: The Mission, Organisation and Governance of Risk Management
Chapter 5: A Cartography of Banking Risks
Chapter 6: Operations Risk in Extreme Market Conditions
Chapter 7: Managing Legal Risk
Chapter 8: Managing Reputation Risk
Part 3: Current Practices in Banks
Chapter 9: Drawing Boards: Motivations and Responsibilities in the Boardroom
Chapter 10: Executive Compensation: Performance, Regulation and Ethics
Chapter 11: Fair Value, Auditing and Internal Controls
Chapter 12: A Framework for Risk-Bearing Governance
"In his book, Risk and Governance – A Framework for Banking Organisations, Sergio Scandizzo tackles a subject that could be seen as relatively dry and technical, yet also is very topical in view of the intense debate about new bank regulations following the 2008 credit crisis. He expounds his subject with his customary charm, insight and historical perspective. Readers of his other books will recognise familiar philosophical references, whilst also finding within the accessible 200 pages a wealth of useful new material, both theoretical and practical.
The theme of the book is the confluence of risk management activities and corporate governance mechanisms, and how these interlink in modern banks. Mr Scandizzo has advice for risk managers, auditors, regulators and other specialists, but above all he addresses boards of directors. He concludes that a re-think of financial risk management is required, focusing on the survival of the organisation and of the wider financial system. He calls for greater awareness from bank boards of all stakeholder needs, not just those of the shareholders.
The introduction begins in a novel way. Relating risk and governance to the perils of shipping and the sea, Mr Scandizzo takes us back to Ancient Rome and an episode in the life of Virgil’s hero Aeneas. Following this surprising start, the first main section of the book gives a brief tour of the essentials of corporate governance and how this has evolved in banks. This is followed by a longer section on aspects of modern risk management, including chapters on how to manage legal risk and reputational risk, which I found particularly helpful since they are of increasing importance yet seldom covered well in risk textbooks. The final section of the book is a wide-ranging survey of current practices in banks, covering topics such as the composition of boards, performance incentives and compensation, accounting and auditing issues, regulatory regimes, risk appetite and how best to report risks. The role of the bank’s board in all these matters is continually emphasised.
Naturally, as readers of Mr Scandizzo’s other books will expect, there is a strong operational risk focus, but this is very much in keeping with the theme and indeed the overall direction modern risk management is taking. Those of us who, as CROs, are charged with developing frameworks across all risk types, will find this book an excellent addition to the current literature on the subject, mixing compelling theoretical argument with a number of really useful practical tips and suggestions. I can thoroughly recommend it."
Peter Harlow, Head of Risk at the ESM (July 2013)