Non-Financial Risk

Non-Financial Risk refers to potential losses or negative impacts on an organization that do not stem directly from financial transactions. This category includes risks related to operational processes, human resources, compliance, reputational issues, and external events. Key types of non-financial risk include operational risk (failures in processes or systems), compliance risk (violations of laws or regulations), reputational risk (damage to brand or public perception), strategic risk (poor business decisions), and environmental risk (impact from external factors like natural disasters). Managing non-financial risk involves proactive strategies to identify, monitor, and mitigate these risks to protect the organization’s overall performance and sustainability.

Basel scope:

Pillar 1
Pillar 2

Capital requirements:

Mitigated by Capital