In a speech given at the recent XLoD Global New York Conference, Mihaela Nistor, Chief Risk Officer and Head of the Risk Group at the Federal Reserve Bank of New York, explored the subject of structural risk.
Titled ‘When the Map No Longer Matches the Terrain’ the premise of the speech was that organizational systems and technology, culture, and frameworks for accountability are being transformed from within. This is causing structural risk and risk management is failing to keep up.
Ms Nistor stated:
We have risk functions that operate in review cycles, but technologies and business processes that operate in real time.
We have governance models that rely on escalation, but cultural norms that avoid friction.
We have accountability frameworks that codify linear decision-making, but workflows that are distributed across organizational layers and business functions.
None of these elements are inherently flawed. But together, they create structural friction — places where process speeds are mismatched, where responsibility falls through the cracks, and where early signals of risk are drowned out by complexity.
This kind of risk builds quietly through gaps and drift. Structural risk is harder to see because it doesn’t come from outside — it comes from within the design of the system itself. And it’s particularly dangerous because it doesn’t trigger alarms. Rather, it prevents decisive action because no one can quite point to where the fault line is, even when they sense something is off.
As risk practitioners, we don’t just ask what risks we manage, but how risk is structured into our organizations — through technology, culture, and systems for managing it.
