A Research On Risk Management

1800 Words Feb 8th, 2016 8 Pages
Risk management is a paramount activity in order to ensure long-term survival in the banking industry. In order to remain as a going concern JPM has put in place vigorous infrastructure to mitigate and measure risks across the firm.

Such infrastructure includes a risk department overseen by the Firm’s Chief Risk Officer (CRO) and an asset-liability committee (ALCO) which monitors the Firm’s balance sheet, liquidity risk and interest rate risk. The primary duties of the CRO as defined by JPM (2014 Annual Report, pg. 110) are as follows:

• Establishing a comprehensive credit risk policy framework
• Monitoring and managing credit risk across all portfolio segments, including transaction and line approval
• Assigning and managing credit authorities in connection with the approval of all credit exposure
• managing criticized exposures and delinquent loans
• Determining the allowance for credit losses and ensuring appropriate credit risk-based capital management

In addition, we will determine whether JPMorgan, America’s biggest bank by assets, should be deemed “too big to fail”. This has been a hot 2016 campaign issue as Democrats Bernie Sanders and Martin O’Malley declare this to be a leading economic risk. Both candidates believe that large banks should be broken up so they are easier to regulate, thus reducing the likelihood of additional bailouts.

In order to do so, we will examine the infrastructure and tools used by JPMorgan to define, mitigate, and measure credit…
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