Advocacy for Achieving Resilience Through HRO Strategies

This book advocates the adoption of a conceptual, theoretical framework for an integrative and compound risk management of extreme events to enhance the resilience of banks. The design of the proposed framework, as argued in detail in Chap. 7 , is based on: (a) the similarities found between the environments for banks and disruption-prone companies; (b) the literature findings about the current risk management practices with banks to address extreme events; and (c) the outcome of the literature study on managing extreme events with disruption-prone companies. Thus, to better understand the environmental drivers and how they can improve the design of existing risk management techniques to deal with extreme events in an uncertain and complex environment, a theoretical framework that integrates principles of high-reliability organizations and resilience engineering is an essential component of apprehending the current banking environment. It also emphasizes the need to adopt both a compound approach when managing risks from extreme events, as extreme events tend increasingly not to occur as single hazards, as well as an integrative approach. Indeed, this proposed framework for banks intents to integrate the existing risk management techniques to address extreme events with the advocated non-predictive risk management concepts. It is important to note that with respect to the application of the advocated HRO strategy U.S. G-SIBs may be better positioned to implement advanced HRO practices, while smaller banks might adapt simplified versions, as argued in Chap. 8 .