Risk management now receives a lot of attention in most organisations. Central banks are no exception. Indeed, risk management is often promoted under the acronym ‘ERM’, standing for ‘enterprise risk management’.

But that acronym can be misleading. In fact, many central banks are approaching ERM ineffectively. The following two stories illustrate what goes wrong and how to get enterprise risk management right.

About 10 years ago, I was interviewing each senior manager at a large central bank