HRO Strategies for Resilient Risk Management in Banking

This book introduces resilience-based concepts and high reliability organization (HRO) principlesadapted from disruption-prone industriesto improve risk management for tail or extreme events in U.S. globally systemically important banks (G-SIBs). HROs thrive in volatile environments by prioritizing adaptability, vigilance, resilience, and safety. Given that both G-SIBs and disruption-prone companies operate in increasingly uncertain and complex settings, there is a shared need for risk management techniques centered on resilience engineering to anticipate and mitigate unexpected extreme events. While G-SIBs are too big to fail and provide valuable insights into resilience in high-stakes scenarios, these approaches can benefit banks of all sizes facing similar risks.

The book explores the social world of banking and management, emphasizing the subjective nature of risk as people interpret events differently. Through surveys, interviews, and case studies, the research identifies growing interest in non-predictive risk methods for bank resilience. It recommends supplementing existing quantitative risk models with a transdisciplinary approach focused on non-predictive HRO principles to help banks prevent and mitigate extreme risks. The study finds that current G-SIB risk methods rely heavily on quantitative models, which may create a false sense of security. Additionally, extreme events are increasingly compound and often driven by human behavior. The book targets scholars and professionals seeking advances in resilience engineering within banking.

Proposes a transdisciplinary approach to advance the study of resilience engineering for banking institutions Introduces an integrated compound risk governance for the risk management of extreme events in banking Widens the angle on the study of mindfulness and principles of high reliability for banking organizations

Autorentext

Pascal vander Straeten has extensive experience in risk management across institutional and corporate banking, project finance, commercial real estate, and emerging markets, working successfully in the US, UK, Germany, Italy, Spain, France, Luxembourg, and Belgium. In 2012, he founded Value4Risk in Australia, consulting on geofinance, tail risk management, and business resilience. He holds an executive MBA from the University of Washington, a postgraduate degree in international relations from Université Catholique de Louvain, bachelor's and master's degrees in applied economics from the University of Antwerpen, and a PhD in economics from the University of Leicester's School of Management.

Inhalt

Chapter 1. Introduction.- Chapter 2. Advocacy for achieving resilience through HRO strategies.- Chapter 3. Aspects, drivers, and Environment for extreme events.- Chapter 4. Risk Management of extreme events in Banking.- Chapter 5. Management of extreme events in Corporate World.- Chapter 6. Summary of analysis on findings from Empirical Data Sources.- Chapter 7. Conceptual Model: Banks borrowing HRO strategies from disruption-prone corporates for managing extreme events.- Chapter 8. Challenges and practicalities of HRO strategies.- Chapter 9: Key research findings, significance, and final reflections.