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Emerging IT Risks: Insights from German Banking

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Listed:
  • Simon Ashby

    (University of Plymouth)

  • Trevor Buck

    (Glasgow University)

  • Stephanie Nöth-Zahn

    (Edinburgh Napier University)

  • Thomas Peisl

Abstract

How do German banks manage the emerging risks stemming from IT innovations such as cyber risk? With a focus on process, roles and responsibilities, field data from ten banks participating in the 2014 ECB stress test were collected by interviewing IT managers, risk managers and external experts. Current procedures for handling emerging risks in German banks were identified from the interviews and analysed, guided by the extant literature. A clear gap was found between enterprise risk management (ERM) as a general approach to risks threatening firms’ objectives and ERM’s neglect of emerging risks, such as those associated with IT innovations. The findings suggest that ERM should be extended towards the collection and sharing of knowledge to allow for an initial understanding and description of emerging risks, as opposed to the traditional ERM approach involving estimates of impact and probability. For example, as cyber risks emerge from an IT innovation, the focus may need to switch towards reducing uncertainty through knowledge acquisition. Since individual managers seldom possess all relevant knowledge of an IT innovation, various stakeholders may need to be involved to exploit their expertise.

Suggested Citation

  • Simon Ashby & Trevor Buck & Stephanie Nöth-Zahn & Thomas Peisl, 2018. "Emerging IT Risks: Insights from German Banking," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 43(2), pages 180-207, April.
    • Handle: RePEc:pal:gpprii:v:43:y:2018:i:2:d:10.1057_s41288-018-0081-8
    DOI: 10.1057/s41288-018-0081-8
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    Cited by:

    1. Martin Eling & Michael McShane & Trung Nguyen, 2021. "Cyber risk management: History and future research directions," Risk Management and Insurance Review, American Risk and Insurance Association, vol. 24(1), pages 93-125, March.
    2. Kjartan Palsson & Steinn Gudmundsson & Sachin Shetty, 0. "Analysis of the impact of cyber events for cyber insurance," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 0, pages 1-16.
    3. Kjartan Palsson & Steinn Gudmundsson & Sachin Shetty, 2020. "Analysis of the impact of cyber events for cyber insurance," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 45(4), pages 564-579, October.
    4. Michael McShane & Trung Nguyen, 0. "Time-varying effects of cyberattacks on firm value," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 0, pages 1-36.

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