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Annual Report Risk Management Analysis Sabma Bank Pakistan By Saad Bin Mehmood

Annual Report Risk Management Analysis Sabma Bank Pakistan By Saad Bin Mehmood

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Published by Saad Bin Mehmood

A. Risk Management Responsibility a. Risk Responsibilities (who is responsible for creating risk framework and implementation of the same) b. Risk Management Group Organization B. CREDIT RISK a. Sovereign Credit Risk b. Non-Sovereign Credit Risk c. Counter Party Credit Risk on Interbank Limits d. Country Risk e. Credit Administration f. Portfolio Risk Measurement Models g. Early Warning System h. Management of Non Performing Loans i. Portfolio Diversification C. MARKET RISK a. Risk Pertaining to Trading Book i. interest Rate Risk - Trading Book ii. Equity Position Risk – 1. Equity price risk 2. Concentration risk iii. Duration GAP Analysis (having implication for market risk) b. Market Risk Capital Charge in each of the three years for the above c. Market risk arising from Foreign Exchange Risk D. LIQUIDITY RISK a. Maturities of Assets and Liabilities E. OPERATIONAL RISK F. Off-balance exposures: a. Letter of credit (all types, their definitions and their implication for risk/exposures/risk management) b. Letter of guarantee

A. Risk Management Responsibility a. Risk Responsibilities (who is responsible for creating risk framework and implementation of the same) b. Risk Management Group Organization B. CREDIT RISK a. Sovereign Credit Risk b. Non-Sovereign Credit Risk c. Counter Party Credit Risk on Interbank Limits d. Country Risk e. Credit Administration f. Portfolio Risk Measurement Models g. Early Warning System h. Management of Non Performing Loans i. Portfolio Diversification C. MARKET RISK a. Risk Pertaining to Trading Book i. interest Rate Risk - Trading Book ii. Equity Position Risk – 1. Equity price risk 2. Concentration risk iii. Duration GAP Analysis (having implication for market risk) b. Market Risk Capital Charge in each of the three years for the above c. Market risk arising from Foreign Exchange Risk D. LIQUIDITY RISK a. Maturities of Assets and Liabilities E. OPERATIONAL RISK F. Off-balance exposures: a. Letter of credit (all types, their definitions and their implication for risk/exposures/risk management) b. Letter of guarantee

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Published by: Saad Bin Mehmood on Jan 27, 2013
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09/17/2013

 
 Risk Management Practices among Pakistani Banks Samba Bank Limited 
IM Sciences Page 1
FRM Assignment 2Risk Management Practices among Pakistani banksSamba Bank Limited(2009-2011)
Submitted To:
Dr.Attaullah Shah
Final Assignment
MBA B&FFinal Semester
Submitted By:
Saad Bin Mehmood
 
 Risk Management Practices among Pakistani Banks Samba Bank Limited 
IM Sciences Page 2
Contents
 1. Risk: ....................................................................................................................................................... 32. Risk Management Responsibilities: ...................................................................................................... 33. Risk Management Group in Samba Bank: ............................................................................................ 44. Credit Risk: ............................................................................................................................................ 45. How samba Bank Manage Credit Risk? ................................................................................................ 46. Sovereign Risk: ...................................................................................................................................... 57. Country Risk: ......................................................................................................................................... 68. Counter Party Credit Risk: ..................................................................................................................... 69. Portfolio Risk Measurement Model & Diversification: ......................................................................... 710. Early Warning System: ...................................................................................................................... 811. Management of Non Performing Loans ........................................................................................... 812. Market Risk: ...................................................................................................................................... 913. Market Risk Management: ............................................................................................................... 914. Risk Pertaining to Trading Book: ..................................................................................................... 1015. Equity Position Risk: ........................................................................................................................ 1016. Equity Price Risk: ............................................................................................................................. 1017. Concentration Risk: ......................................................................................................................... 1018. Duration Gap Analysis: .................................................................................................................... 1119. Market Risk Capital Charge: ............................................................................................................ 1220. Market risk arising from Foreign Exchange Risk: ............................................................................ 1221. Liquidity Risk: .................................................................................................................................. 1322. Liquid risk Management: ................................................................................................................ 1323. Maturities of Assets and Liabilities: ................................................................................................ 1424. OPERATIONAL RISK ......................................................................................................................... 1425. Capital requirements for operational risk since 2009 to 2011 are as follows: ............................... 1626. Off Balance sheet exposures: ......................................................................................................... 1627. Letter of Credit: ............................................................................................................................... 1628. Derivatives: ..................................................................................................................................... 16
 
 Risk Management Practices among Pakistani Banks Samba Bank Limited 
IM Sciences Page 3
1.
 
Risk:
Risk is basically the uncertainty factor, that in the sense of investment and finance Risk meansthat its is the deviation between the expected and actual return. The probability of loss that theinvestor has to face while investing his finance in a project or business.In modern era where every economy is supported by the pillars of financial institutions, the risk has become a very prominent factor for the sake of strong and healthy economy. Although onone side of picture the Risk is consider something harmful but its not completely true, it actuallytoo much risk that can be harmful for a business or investor because the other thing that isattached to the other end of the risk is Return. This moves in the same direction as risk. As youcannot earn retu
rn if you don’t take the risk while investing. This phenomenon makes the risk a
very important factor as well.
2.
 
Risk Management Responsibilities:
The Risk management framework means to identify what sort of risk can be arise in yourinvestment and to create a proper map which from the financial institution point of view containsvarious policies and procedures in order to cope Risk.As we are discussing about the Risk Management of Samba Bank Limited so the Risk management of Samba Bank seems very efficient as per its annual report says.According the annual reports samba bank has an independent Risk Management Organizationalunit, whose task is to manage Risk on various levels. This unit is independent and has authorityto directly report to the chief executive officer & president of Bank. As a bank samba bank alsohas to deal various types of Risk. The final responsibility Risk Management function is given tothe Board of Directors in the Samba bank. As we know the Risk Management is very serious

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