Material Risk Identification and Risk Universe Design

Start with the full risk universe

The materiality framework should begin with an expansive risk universe rather than a narrow list of currently modelled risks. That creates space to consider concentration risk, residual risk, strategic risk, pension risk, reputational impacts, and emerging risk themes.

Build explicit inclusion logic

For each risk category, the institution should record:

• a description of the risk
• the transmission channel to earnings, capital, liquidity, or franchise value
• whether the risk is material
• how it is measured or otherwise assessed
• who owns the methodology and evidence

Keep it connected to governance

Risk identification is not a static library exercise. It should connect to risk appetite discussions, committee papers, and annual review triggers so the taxonomy evolves when the business model changes.