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Table Of Contents

Risk as Hazard:
1)Establishing a risk management long term vision and strategy
2)Risk Identification
4)Defining Roadmap
5)Establish Risk measures and early warning indicators
6)Executing the key requirements:
7)Integrate Risks Management/Strategy into bank internal decision making
process
RBI Guidelines on Risk Management
RBI suggests that
Types of Risks:
LIQUIDITY RISK
Core Deposits/Total Assets
Volatile Liabilities/Total Assets
Short term assets/Total Assets
Strategies for managing Liquidity risk
1.Liquid Assets Approach
2.Cash Flow Matching Approach
3.Mixed Approach
Factors that affect its demand:
Arbitrage
Repo Market
Liquidity Adjustment Fund (LAF)
Interim Liquidity Adjustment Facility (ILAF)
Liquidity risk comprises of:
1.Funding liquidity risk:
2.Trading-related liquidity risk:
MARKET RISK
Benefits of Market Risk
Managing the Market Risk in the Banks:
1.The Notional Amount Approach:
1.Value At Risk (VaR):
CREDIT RISK
Credit risk may take various forms, such as:
COMPONENTS OF CREDIT RISK MANAGEMENT
The responsibilities of the Board with regard to credit risk management include:
Organizational Structure
Functions of CRMD:
Systems and Procedures
Limit setting
Credit Administration:
1. Documentation
2. Credit Disbursement
3. Risk Rating Model
4. Credit monitoring
5. Loan Repayment
6. Maintenance of Credit Files
7.Collateral and Security Documents
8.Measuring Credit Risk
Business Risk
Financial Risk
External Credit Rating:
Internal Credit Rating:
2.Internal Ratings Based (IRB) Approach: Foundation and Advanced Approach
Example of Union Bank of India:-
Rating Score Revised w.e.f. 01.04.09
Working capital Term loan
3.Advanced Measurement Approaches (AMA)
A Generic Measurement Approach
Estimated level of operational risk depends on
Estimated Probability of Occurrence
Estimated Potential Financial impact
Estimated Impact of Internal Controls
Reservations about Basel II
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Risk Management Research Final

Risk Management Research Final

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Published by Ahmed Beram

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Published by: Ahmed Beram on Aug 20, 2011
Copyright:Attribution Non-commercial

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05/29/2012

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