The status of people risk management in UK banks

Against the background of a succession of financial mishaps in the banking industry, all deeply rooted in the behaviour of individual employees, this article examines the place of ‘people risk’ in the context of operational risk management in UK banks. Informed by an examination of the literature, alongside empirical evidence from twenty-five semi-structured interviews with operational risk practitioners in UK banks, it finds varying levels of awareness and understanding of people risk. As a result of a regulatory focus on quantitative capital requirements, it also finds management of people risk subsumed by this regulatory approach, and evidence that the ‘embedded’ nature of people risk has hindered the development of a more comprehensive industry-wide approach to people risk management. Nevertheless, some operational risk managers are working more closely with their human resource partners to develop a more cohesive approach to people risk management. In the context of current reforms to the capital requirements for operational risk, it may be an opportune time to examine the regulatory approach to people risk in banks.