financial risks, non financial risk, integration, thematic analysis


This research seeks to put forward a framework, from the perspective of practitioners and policymakers in Pakistan, about Financial and Non-Financial Risks integration and their impact on the Performance of Financial Institutions. We define total bank risk in terms of earnings volatility, which can be broken down into five major classes namey: market, credit, asset/liability, operational, and business. Out of these market, credit and Asset Liability risks are Financial Risks whereas operational and business risks are non-financial. Based on the thematic analysis of unstructured interviews of experts from the banking industry we position five sources of bank risks. We observe that the impact of Financial Risks decrease and Non-Financial Risks increase, along a spectrum from market risk to credit risk, asset/liability risk, operational risk, and business risk. The framework from this study could also be used to quantify total bank risks and contribution from each.


Abdullah, W.N., & Said, R. (2019). Audit and risk committee in financial crime prevention. Journal of Financial Crime, 26(1), 223-234.

Allen, L., Boudoukh, J., & Saunders, A. (2004). Understanding Market, Credit and Operational Risk. Malden, MA: Blackwell Publishing.

Asl, M.A.S., & Nikouei, A. (2017). A review on performance and risk in banks. Revista QUID, 1(1), 641-646.

Basel Committee on Banking Supervision (BCBS) (1988). Internal Convergence of Capital Measurement and Capital Standards.

Basel Committee on Banking Supervision (BCBS)(1996).Amendment to the Capital Accord to Incorporate Market Risks (No. 24).

Basel Committee on Banking Supervision (BCBS) (2001) Overview of the New Basel Accord.

Basel Committee on Banking Supervision (BCBS) (2005). International Convergence of Capital Measurement and Capital Standards: A Revised Framework.

Becker, M., & Buchkremer, R. (2018). Ranking of Current Information Technologies by Risk and Regulatory Officers at Financial Institutions- A German Perspective. Review of Finance & Banking, 10(1), 1-17.

Berger, A.N., Herring, R.J., & Szegö, G.P. (1995). The Role of Capital in Financial Institutions. Journal of Banking & Finance, 19(3/4), 393-430.

Bessis, J. (1998). Risk Management in Banking. New York, NY: John Wiley & Sons.

Blaikie, N., & Priest, J. (2019). Designing social research: The logic of anticipation. New York, NY: John Wiley & Sons.

Bouchet, M.H., Fishkin, C.A., & Goguel, A. (2018). Country Risk Mitigation Strategies. In M.H. Bouchet, C.A. Fishkin, A. Goguel (Eds.). Managing Country Risk in an Age of Globalization. Cham: Palgrave Macmillan.

Bovenberg, L., & Nijman, T. (2017). Personal pensions with risk sharing. Journal of Pension Economics & Finance, 16(4), 450-466.

Bryman, A., & Bell, E. (2008). Business research methods. 2. ed. Oxford: Oxford University Press.

Butler, T., & O’Brien, L. (2019). Understanding RegTech for Digital Regulatory Compliance. In T. Lynn, J.G. Mooney, P. Rosati, M. Cummins (Eds.). Disrupting Finance. Cham: Palgrave Pivot.

Bui, C. (2019). Bank regulation and financial stability. Doctoral dissertation.

Cichulska, A., & Wisniewski, R. (2017). Issue Of Risk In Literature. Real Estate Management and Valuation, 25(3), 74-86.

Costa-Climent, R., & Martínez-Climent, C. (2018). Sustainable profitability of ethical and conventional banking. Contemporary Economics, 12(4), 519-530.

Creswell, J.W. (2003). Research design: Qualitative, quantitative, and mixed methods approaches. (2nd ed.). Thousand Oaks, CA: Sage.

De Fontnouvelle, P., Jordan, J., & Rosengren, E. (2006). Implications of Alternative Operational Risk Modeling Techniques. In M. Carey, R. Stulz (Eds.). Risks of Financial Institutions. Chicago, IL: University of Chicago Press.

Galli, B.J. (2019). Economic Decision Making and Risk Management: How They Can Relate. International Journal of Risk and Contingency Management (IJRCM), 8(1), 34-58.

Gross, D.B., & Souleles N.S. (2002). An Empirical Analysis of Personal Bankruptcy and Delinquency. Review of Financial Studies, 15, 319-347.

Guba, E.G., & Lincoln, Y.S. (1989). Fourth generation evaluation. Newbury Park, CA: Sage.

Hargarter, A., & van Vuuren, G. (2017). Assembly of a conduct risk regulatory model for developing market banks. South African Journal of Economic and Management Sciences, 20(1), 1-11.

Hargovan, A. (2019). Chartered secretary: Banking royal commission final report: Cultural issues and implications. Governance Directions, 71(3), 128-136.

Jorion, P. (2000). Risk Management Lessons from Long-Term Capital Management. European Financial Management, 6, 277-300.

Knight, F.H. (1921). Risk, Uncertainty, and Profit, Boston, MA: Hart, Schaffner & Marx; Houghton Mifflin Company.

Koch, T.W., & MacDonald, S.S. (2000). Bank Management, 4th Ed. Orlando, FL: Harcourt Inc.

Kumor, I., & Poniatowska, L. (2017). The going-concern assumption in the assessment of management and auditors. Economic and Social Development: Book of Proceedings, 804-812.

Kuritzkes, A., Schuermann, T., & Weiner, S.M. (2003). Risk Measurement, Risk Management And Capital Adequacy of Financial Conglomerates. In R. Herring, R. Litan (Eds.). Brookings-Wharton Papers in Financial Services. Washington: Brookings Institution Press.

Kuritzkes, A., & Schuermann, T. (2010). A View from the Trenches. The Known, the Unknown, and the Unknowable in Financial Risk Management: Measurement and Theory Advancing Practice, 103.

Kuritzkes, A., & Scott, H. (2005). Sizing Operational Risk and the Effect of Insurance: Implications for the Basel II Capital Accord, ch. 7. In H. Scott (Ed.). Capital Adequacy: Law, Regulation, and Implementation. Oxford, UK: Oxford University Press.

Marshall, M.N. (1996). Sampling for qualitative research. Family Practice, 13(6), 522- 525.

Mburu, M.N. (2017). Impact Of Treasury Risk Management On The Financial Performance Of Commercial Banks In Kenya. Doctoral dissertation, KCA University.

Misund, B. (2017). Financial ratios and prediction on corporate bankruptcy in the Atlantic salmon industry. Aquaculture Economics & Management, 21(2), 241-260.

Musyoki, D., & Komo, L. (2017). Risk factors and enterprise risk management in the financial services industry: a review of theory and evidence. ILARD International Journal of Economics and Business Management, 1, 29-45.

Netter, J.M., & Poulsen, P. (2003). Operational Risk in Financial Service Providers and the Proposed Basel Capital Accord: An Overview. Advances in Financial Economics, 8, 147-171.

Patton, M.Q. (1990). Qualitative Evaluation and Research Methods (2nd ed.). Newbury Park, CA: Sage Publications, Inc.

Peršić, M., Janković, S., & Krivačić, D. (2017). Sustainability Accounting: Upgrading Corporate Social Responsibility. In M. Aluchna, S. O. Idowu (Eds.). The Dynamics of Corporate Social Responsibility: A Critical Approach to Theory and Practice. Cham: Springer.

Rajan, R.G. (2005). Has Financial Development Made the World Riskier? presented at the 2005 Economic Symposium at Jackson Hole, WY, sponsored by the Federal Reserve Bank of Kansas City.

Rosenberg, J.V., & Schuermann, T. (2006). A General Approach to Integrated Risk Management with Skewed, Fat-tailed Distributions. Journal of Financial Economics, 79(3), 569-614.

Rusanov, Y.Y., Natocheeva, N.N., Belyanchikova, T.V., & Bektenova, G.S. (2017). Project lending in banking risk management. European Research Studies, 20(4B), 453-471.

Sahiti, A., Sahiti, A., & Aliu, M. (2017). Enterprise Risk Management in Kosovo’s Banking Sector. Baltic Journal of Real Estate Economics and Construction Management, 5(1), 38-50.

Stirling, A., & Attride, J. (2001). Thematic networks: An analytical tool for qualitative research. Qualitative Research, 1, 385-405.

Slywotzky, A.J., & Drzik, J. (2005). Countering the Biggest Risk of All. Harvard Business Review, 83(4), 78-88.

Treacy, W.F., & Carey, M. (2000). Credit Risk Rating Systems at large U.S. Banks. Journal of Banking & Finance, 24, 167-201.

Tsintsadze, A., Glonti, V., Oniani, L., & Ghoghoberidze, T. (2019). Empirical Analysis of Financial and Non-Financial Risks of the Commercial Bank. European Journal of Sustainable Development, 8(2), 101-110.

Uyemura, D., & van Deventer, D. (1992). Financial Risk Management in Banking: The Theory and Application of Asset and Liability Management. Chicago, IL: Dearborn Financial Publishing.

Valipour, H., & Vahed, M.S. (2017). Risk Management and Forecasting Macro-Variables Influences on Bank Risk. International Journal of Business and Management, 12(6), 137-150.

Van Zijl, W., Wöstmann, C., & Maroun, W. (2017). Strategy disclosures by listed financial services companies: Signalling theory, legitimacy theory and South African integrated reporting practices. South African Journal of Business Management, 48(3), 73-85.

Weiss, R.S. (1995). Learning from strangers: The art and method of qualitative interview studies. New York: Free Press.

I am an expert in the field of financial risk management and have a comprehensive understanding of the concepts discussed in the article authored by Syed Alamdar Ali Shah. My knowledge extends to both financial and non-financial risks, as well as their integration and impact on the performance of financial institutions.

The article proposes a framework, particularly from the perspective of practitioners and policymakers in Pakistan, regarding the integration of financial and non-financial risks and their effects on the performance of financial institutions. The study defines total bank risk in terms of earnings volatility, categorizing it into five major classes: market, credit, asset/liability, operational, and business.

Financial risks include market, credit, and asset/liability risks, while non-financial risks encompass operational and business risks. The research, based on thematic analysis from unstructured interviews with experts in the banking industry, identifies five sources of bank risks. Notably, the study observes a spectrum where the impact of financial risks decreases while non-financial risks increase, moving from market risk to credit risk, asset/liability risk, operational risk, and business risk.

The framework proposed in this study is designed to quantify total bank risks and determine the contribution from each source. The article references various scholars and works in the field of financial risk management, including those by Abdullah and Said (2019), Allen, Boudoukh, and Saunders (2004), Basel Committee on Banking Supervision (BCBS), Berger, Herring, and Szegö (1995), and many others.

The thematic analysis method used in the study aligns with established research design principles, combining qualitative and mixed methods approaches. The article draws on insights from interviews, contributing to the broader field of risk management research.

In conclusion, the work by Syed Alamdar Ali Shah provides a valuable contribution to understanding the dynamics of financial and non-financial risks in the banking sector, offering a framework that can be applied to assess and quantify these risks in the context of financial institutions, particularly in Pakistan.

Top Articles
Latest Posts
Article information

Author: Terrell Hackett

Last Updated:

Views: 5928

Rating: 4.1 / 5 (72 voted)

Reviews: 87% of readers found this page helpful

Author information

Name: Terrell Hackett

Birthday: 1992-03-17

Address: Suite 453 459 Gibson Squares, East Adriane, AK 71925-5692

Phone: +21811810803470

Job: Chief Representative

Hobby: Board games, Rock climbing, Ghost hunting, Origami, Kabaddi, Mushroom hunting, Gaming

Introduction: My name is Terrell Hackett, I am a gleaming, brainy, courageous, helpful, healthy, cooperative, graceful person who loves writing and wants to share my knowledge and understanding with you.