Risk Management : Expansion Effectiveness

Risk refers to any potential problems that would threaten the likelihood of success for or any project. These potential problems might prevent a project from achieving some or all of its objectives by increasing time and cost. Risk factors can even

Through the examination of ABC Community Banks environments, both internal and external risks of the organizations can be identified. External

First I would categorized them in 3 different groups, business related, political and environmental, but is very important to mention that in some cases a single risk can be categorize in more than one group, for example, that is the case of the weather risk that I consider in the environmental group but it has a direct impact in the business related group.

RBC engages a strong risk culture, with an understanding of risk awareness and responsibility. They use several methods to manage and alleviate their vulnerability to different types of risk. This bank’s risk-management process includes in-depth risk measurement, risk control, and risk governance, with setting the right risk culture at the top with their Board of Directors through their “Three Lines of Defence Model ,” (See Exhibit 4).

Financial risk is the possibility that the company's cash flow proves inadequate to meet its financial obligations. It is also the term for many different types of risks related to the finance industry. There are many types of financial risks. The most common ones include credit risk, liquidity risk, asset backed risk, foreign investment risk, equity risk and currency risk.

But rather must perform comprehensive financial and economic analysis to ascertain the risk involve and the level they can take (Murray & Andrew, 1998: Chartered Institute of Bankers, 2015; 1994; Ishola,

Defined by Coopers textbook, risk is the exposure to the consequences of uncertainty and has two elements: the likelihood of something happening that has an impact on the project objectives, and the positive or negative consequences of something impacting the project objectives (Cooper, Grey, Raymond, & Walker, 2005)

It takes into account not only market risk but also the other risks like liquidity risk, political risk, credit risk and operational risks.

J.P. Morgan Private Bank was one of the most successful banking services globally. It offered high-end financial products and services with professional risk management team. In financial crisis, the Private Bank successfully survived with relatively great performance. This paper would exposit the key to their success of risk management by answering six questions.

Systematic risks are risks one cannot avoid such as market risk, interest rate risk, currency risk,

Risk management is an activity which integrates recognition of risk, risk assessment, developing strategies to manage it, and mitigation of risk using managerial resources. Some traditional risk managements are focused on risks stemming from physical or legal causes (e.g. natural disasters or fires, accidents, death). Financial risk management, on the other hand, focuses on risks that can be managed using traded financial instruments. Objective of risk management is

Concept of risk, risk assessment, risk management and how uncertainty affects the process will be discussed.

The financial sector has been hit badly by the financial crisis in 2008. The increased competition between banks induced executives to take excessive risk to maximize bank’s profit, as their performance compared to other competitors is measured by the revenues they achieve to financial institutions and its stock value (Kashyap, Rajan et al. 2008).

As such, it is important that senior management as well as the Board of Directors must understand the existence of such risk on the balance sheet and they should ensure that the structure of the institutions’ business and the level of balance sheet risk it assumes are effectively managed, that appropriate policies and procedures are established to control and limit these risks, and that resources are available for evaluating and controlling interest rate risk. Increasingly Asset Liability Management has become an integral part of Bank Management. Banks’ are exposed to Balance Sheet Risk, where it is absolutely necessary for the management of the bank to understand the existence of such risk and best manage the exposure to the risk. The Asset Liability Committee (ALCO), comprising of the senior management of a bank, is primarily responsible for Balance Sheet Management or more specifically Balance Sheet Risk Management. The report aims at promoting international best practices in Balance Sheet Management for the banking industry in Bangladesh. The purpose of the report/ guidelines is to provide guidance to management and to train new staffs. This is intended to be the basic framework for further development as the skill sets go up the curve and also, to introduce new policies and processes as we make progress in understanding and implementing the basics.

The urgency of proper credit risk management for wellbeing of the banks has inspired me to check whether the risk management practices of the banks have created the situation