Reputational Risk Management in Financial Institutions

Editors Thomas Kaiser (KPMG and Goethe University) and Petra Merl (UniCredit Bank AG) have assembled a team of industry experts who provide an introduction into the brave new world of reputational risk in the financial industry. 

Reputational Risk Management in Financial Institutions charts the history and evolution of this relatively new discipline, discussing how it is managed, mitigated, and in particular regulated. Readers will receive practical guidance regarding how to use best practice to implement a reputational risk management framework, thus both anticipating possible regulatory requirements and improving the decision-making process of the bank or financial institution at which they work.

With the increase of regulatory scrutiny in this area (for example in the form of the Internal Capital Adequacy Assessment Process), the demand for a practical guide to the potential pitfalls of managing this very capricious and hard-to-quantify risk has increased. High profile events such as the London whale at JP Morgan and LIBOR rigging at RBS have led to greater scrutiny imposed on the reputation of banks and financial institutions. In Hong Kong the regulation of reputational risk has already been introduced, with the Hong Kong Monetary Authority issuing guidance in 2008 in the form of the HKMA Supervisory Policy Manual. Just recently in July 2014 the European Banking Authority issued their draft guidelines CP 14 on the supervisory review and evaluation process which asks for an explicit risk management process for reputational risk, linked to the operational risk management process.

Reputational Risk Management in Financial Institutions provides illustrative case studies, tracing the history of this risk type, demonstrates best practice methodologies and processes for managing it, examines the changing regulation requirements and compliance issues, and discusses what the future holds for reputational risk in banks and financial institutions.

Seasoned authors from UniCredit, UBS, EIB and a number of other leading banks, insurance companies, regulators, universities and consultancies cover topics such as:

• The history of reputational risk
• Corporate governance aspects of reputational risk
• Risk culture and social risks
• Business continuity in the context of reputational risk
• Reputational risk management practices in banks and insurance companies
• Public relations and perception
• The regulatory response to reputational risk management

Protecting reputation is now a significant component of risk management in banks and financial institutions, and can no longer be ignored.  Reputational Risk Management in Financial Institutions is an essential, holistic guide to the identification and mitigation of the risks that are now the responsibility of all industry players.