This book has a dual purpose, to answer the call for more research on Knowledge Risk Management (KRM), and to propose a KRM framework specific for banks, in particular, for cooperative credit banks (CCBs).

The choice to deal with KRM is not connected only with the interest in a strand still in its infancy, but it comes, above all, from the fact that, surprisingly, in banking and finance research, so far, KRM and its related topics have been just marginally addressed.

Although KRM is still a developing strand, interest in this field is growing in recent years, and more and more scholars are approaching it, providing valuable learning opportunities (Bratianu, 2018; Durst & Henschel, 2020; Durst & Zięba, 2017, 2018; Massingham, 2008, 2010). Nonetheless, attention to KRM by scholars involved in finance and banking studies seems to be still limited. This really surprises, at least the author of this book, since practically all organizations belonging to financial and banking sectors are exposed to several risks in carrying out their typical activities. Banks, for example, face different types of risk: credit risk, liquidity risk, market risks, or operational risk. Why not also knowledge risks? It is precisely from this question that the present study moves.

Knowledge risk has been defined as a “measure of the probability and severity of adverse effects of any activities engaging or related somehow to the knowledge that can affect the functioning of an organization on any level” (Durst & Zięba, 2018, p. 2). Therefore, each organization could be exposed to different knowledge risks. Even banks and other financial institutions. And this is why scholars and practitioners have started to deal more and more with KRM issues, so as to be able to provide management with tools and techniques for their control and mitigation. The same would be expected from banking and finance research, but the state-of-the-art of literature currently shows a shortage of contributions specifically dealing with knowledge risks management in organizations belonging to these sectors. This work, therefore, appears to be timely and necessary, even more because it is focused on a particular type of banks, i.e., cooperative credit banks.

The post-financial crisis scenario put European cooperative banks facing complex challenges. The exceptionally low level of interest rates set by the European Central Bank, the low profitability of traditional banking services—the real sustenance of cooperative banking—as well as the entry of Fintech companies into financial markets, put cooperative banking sector under pressure, making more difficult for CCBs to preserve the unique and distinctive characteristics of their business model (Migliorelli, 2018). In the case of Italian cooperative banks, the situation was further complicated by a reform based on the establishment of Cooperative Banking Groups—a completely new figure in the Italian and European banking sectors—to which cooperative banks are obliged to adhere. These organizational transformations required Italian cooperative banks to make an additional effort to maintain their characteristics of local banks, despite having to be part of a wider and more complex reality such as a banking group. In this situation, a governance capable of facing unprecedented challenges, and an effective risk management able to face an increasing number of risks became of crucial importance for Italian cooperative banks. On the basis of these premises, we considered CCBs the ideal sample for the present research, being currently engaged in strong organizational changes that also entail having to manage new and more complex knowledge. Investigating, therefore, the presence or absence of awareness of a risky side of knowledge, potentially harmful to the bank, seemed to satisfy the dual purpose of this book, that is to contribute to development of KRM strand—providing the experience of a type of organization little covered in literature—and to propose a framework for knowledge risks management specific for banks.

In order to achieve the above-mentioned, this book consists of six chapters. This introduction will be followed by Chapter 2, which provides an overview of the main concept of Knowledge Management, Risk Management, and Knowledge Risk Management, in order to provide basic information on these issues also to the reader more specialized in banking and finance. A focus on knowledge risks is provided as well, including an explanation of their main characteristics and potential harmfulness. Chapter 3 is aimed at verify the shortage of research contributions on Knowledge Risk Management with specific reference to organizations belonging to financial and banking sectors, performing a systematic review. To contextualize this review, recent trends in knowledge management in banks and other financial firms are also provided, and some aspects of strengths and weaknesses of today’s risk management of these organizations are considered as well. Chapter 4 includes insights into the sample of cooperative banks involved in the analysis conducted in this book, i.e., the CCBs members of the Federazione delle Banche di Credito Cooperativo dell’Abruzzo e del Molise (Fedam). To better understand the challenging changes these banks are actually facing, an overview of the Italian Cooperative System is provided; direct experience of an administrator of a CCbs member of Fedam is also presented to obtain further information from the real operations of a cooperative bank every day at the forefront of the fight against risks, including knowledge risks. In Chapter 4, a section dedicated to diversity in baking as a strength/weakness of cooperative banks is also included.

The readiness of cooperative credit banks in Knowledge Risk Management is addressed in Chapter 5, performing a case study on a sample of Italian cooperative credit banks. Considering the results of this analysis, a KRM framework specific for cooperative credit banks is proposed.

The book ends with Chapter 6 dedicated to concluding remarks and suggestions for further future research.