COVID-19 / Cyber security and Fraud / Geopolitical / Macroeconomic Risk / Pandemic Response / Risk Management Practices / Systemic Risk / Technology Innovations
COVID-19 Triggers Great Nonfinancial Risk Crisis: Nonfinancial risk management best practices in Canada
Lois Tullo, Executive in Residence, Global Risk Institute
The spread of viral disease COVID-19 is the most transformative nonfinancial risk (NFR) of this decade. The uniting of strategy and risk management has never been more crucial. The interrelationship between the pandemic and the increases in aging, chronic diseases, interstate conflicts, nationalism, cyber attacks, cyber dependency, asset bubble, and sovereign debt is transforming our reality in previously unimaginable ways.
NFR management best practices. Canadian financial institutions (FIs) prioritized NFR management and adopted a framework that enabled them to identify early the potential threat of the spread of viral disease (COVID-19). These FIs reprioritized COVID-19 risk into their existing enterprise risk management framework to reduce the exposure and impact of the pandemic. Best practice FIs re-evaluated their strategic assumptions and reset their business strategy in light of the reprioritized NFR matrix.
This paper was originally published in the Journal of Risk Management in Financial Institutions (Volume 1, Number 1, Winter 2020-21, pp. 40-58) in December 2020. Written by Lois Tullo, Executive in Residence, Global Risk Institute, the paper reviews best practices in managing NFRs and trends from the practitioner’s point of view. Thirteen Canadian FIs are reviewed along with their positioning of NFR pre- and post-COVID-19, and their recent enhancements to their NFR-management process. The author illustrates how the adoption of the Global Risks and Trends Framework by several Canadian FIs has influenced their preparation and resilience in this pandemic. Finally, the author discusses best practice examples, as well as challenges that still exist, how organizations have adjusted their strategy linking risk to their recent experience, and what lessons other FIs can learn about managing these NFRs.
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