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Risk Management

Risk Management

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Published by Daniyal

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Categories:Types, School Work
Published by: Daniyal on Feb 07, 2009
Copyright:Attribution Non-commercial

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09/28/2010

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WORLD BANK
Banking Risk Exposures
Balance sheetstructureIncome statementstructure/profitabilityCredit riskCapital adequacyInterest rate riskMarket RiskCurrency riskLiquidity riskFinancial RisksBusiness RisksLegal risksFinancialInfrastructureMacroPolicy risksSystemic(Country) riskEvent RisksPolitical risksOther exogenousrisksBanking crisisriskContagion risk
The Banking Risk Spectrum
Operational RisksBusiness strategyriskInternal systemsand operationalrisksTechnology riskMismanagementand FraudReputationalRisk
 
 
WORLD BANK
 
“...All of life is the management of risk, not itselimination…”
What major strategic risks(from products
or 
fromthe environment) does the bank face?
Planning and defining risk tolerance levels: Havetheboardand executive management delineatedthelevel of business risk they are willing toassumeforeach area and overall?
Financial and Other Risk identification: How is therisk in current operationsidentified?
Risk supervisionand management: How arecurrent and proposed operations managed?
Risk monitoring: Evaluate the effectiveness of controlimplementation
How effectively are board-approved risk tolerancelevelscommunicatedin the organization?
Evaluate themannerin which risk is beingassumed,measured, limited, controlled, and
 
 
WORLD BANK
THE RELATIONSHIP BETWEENRISK ANALYSIS BANK SUPERVISION ANDGOOD MANAGEMENT
q
Bank supervisors and financial analysts -including executivemanagement- shouldview the risk management process in a similar manner:
 –
 whathappened
 –
whyit happened
 –
theimpactof events, and
 –
a crediblefuture strategyto rectify unacceptable trends
q
Off- and on-site analysis (supervision) is similar to the financialanalysis of information, to betested through verificationof preliminaryconclusions. On-site examination is essential, but could be performedby supervisors, analysts, or external auditors
q
Regulators and supervisors should ensure thatall financial institutionsare supervised using aconsistent philosophy, to ensure a level playingfield for financial intermediaries
q
Properly utilized, bankinganalysis can enhancethe institutionaldevelopment of the banks concerned
q
The bottom line -
what will happen to the bank if 
…………”

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