WHAT IS RISK ?

- It takes on many forms but is broadly

categorized as a chance wherein an outcome or
investment’s actual return will differ from the
expected outcome or return.
- It includes the possibility of losing some or all of
the original investment.
- Different versions of risks are usually measured
by calculating the standard deviation of the
historical returns or average returns of a specific
investment.
- It takes on many forms but is broadly
categorized as a chance wherein an outcome or
investment’s actual return will differ from the
expected outcome or return.
- It includes the possibility of losing some or all of
the original investment.
- Different versions of risks are usually measured
by calculating the standard deviation of the
historical returns or average returns of a specific
investment.
RELATIONSHIP BETWEEN RISK
AND RETURN
As risk is directly proportional to return, the
more risk a bank takes, it can expect to make
more money.
TYPES OF RISK IN THE BANKING
SECTOR
1- Credit or Default Risk
2- Liquidity Risk
3- Interest Rate Risk
4- Forex Risk
5- Commodity Price Risk
6- Equity Price Risk
7- Market Price Risk
8- Operational Risk – Human, IT, etc.
9- Other – Country, Political, Reputational
Risk etc.