Abstract

The risk management explosion has been accompanied by the rise of risk-based regulations. The 2004 reform of the Basel Agreements (Basel II) is usually presented as a typical example of the development of such risk-based regulations. By comparing the discourses accompanying Basel II with an in-depth analysis of its technical provisions for credit risk regulation, our study shows that, if the Basel reform was driven by a neoliberal political agenda, it counter-intuitively resulted in a significant development of intrusive disciplinary processes for banks and their credit-management processes. Drawing on Foucault’s analyses of neoliberalism, the paper however suggests that the presence of disciplinary aspects in this risk-based regulation should not necessarily be regarded as a “pathological drift” or as a “subversion” from its initial neoliberal program, but rather as both neoliberalism’s other face and its very condition. Methodologically, this study also underlines the value of approaching risk management issues by an in-depth analysis of their technical specifications, since this approach enables us to construct the contrasting image of the changes presented here, and consequently to highlight the strong disciplinary processes embedded in this neoliberal-inspired reform and their structuring effects on management accounting and control processes. Finally, this approach also allows us to better understand the role played by calculative technologies in this disciplinarization process.

Introduction

Historically, risk management was essentially conceived as a calculative practice, most commonly developed in the field of finance and insurance. Since the1990s, the concept has been tremendously successful at the societal level (Beck, 1992). As far as organizations are concerned, the works of Power (1997, 2004, 2007) have shown how it is through audit that this concept has been introduced and diffused within management processes. With the reinforcement of shareholders’ power since the 1980s, audit – reinterpreted through the lens of agency theory – has been pushed forward: new “governance” norms and standards have assigned a central role to audit and its control processes, to the point of fully extending their logic within risk management under the form of enterprise-wide risk-management systems (ERM), for example. This dynamic has be analyzed as a “shift” from “risk quantification” towards “risk governance” (Power, 2004, 2007).