Risk Management Portfolio Project. The Chief Risk Officer

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

My partners and I have made a list of areas that might cause the project delays or failure with their respective outcomes. We have listed the risk below that can prevent the project to finish on time.

The first goal is tolerable uncertainty. According to Elliott (2012), keeping management assured whatever happens will be within anticipated bounds and effectively addressed. The developed risk management program has analyzed the risks for the community bank and aligned safeguards with the bank’s objectives. Accounting for the risk appetite of senior management guides the CRO. Through ERM and traditional risk management, risk financing techniques and the purchase of insurance mitigate the identified risks.

The effort to decrease and evaluate risks to patients, staff, and organizational resources within a health care institution is defined as health care risk management. In order for facilities to minimize financial loss is to reduce accidents and injuries. All health care facilities and providers put risk management in to practice on a continuing basis. In 1985, the senior officers of the The Health and Human Services (DHHS) decided that there was a need to implement policies and procedures on risk management and risk assessment. There was a considerable amount of concern about how the advances in risk management and risk

• Governance and oversight: Assessing business model and strategy changes and reinforcing the importance of sound corporate governance appropriate for the size and complexity of the individual bank. A specific focus will be on determining the adequacy of strategic, capital, and succession planning. Examiners will assess whether the plan is appropriate in light of the risks in new products or services. If applicable, examiners will assess the bank’s merger and acquisition processes and procedures.

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After the passage of the FDICIA, two trends have emerged that have further exacerbated efforts in regulating moral hazards. The first trend is increased asset concentration among larger banks. Over time, more assets have flowed into fewer banks, and as a result more TBTFs were incubated in the process. The second trend to emerge is increased complexity of banks. Increase of bank sizes involved not only structural growth but also geographic reach. Larger banks begin to offer a greater scope of offerings. With this plethora of change amid increased sizing, new skills needed to be developed in order to manage the new risk. The complexity and size of banks and their associated offerings caused a greater level of asymmetry between regulators and bank managers.

A Bank is a financial intermediary that acts as an economic firm producing goods and services. With this view in mind it’s easy to see that a bank exists to make a profit. In order for a bank to be successful and make a profit, it has to take risk. A bank that is averse to risk will be a stagnant institution unable to adequately serve its customers effectively and produce a profit. However, a banking institution that takes excessive or unnecessary risk is also likely to run into trouble. All risk is uncertain but with bounds the probability of an outcome can be predicted using expectation. A bank can also run into trouble if it decides to take a

Today, banks faced multiple risks inherent to their activity, whether they are financial or operational.

Bank of America seems possessed of two, very nearly contradictory, management styles. On some level, this represents a transition for the corporation as it becomes larger and larger and must increasingly face the kind of problems only associated with corporations of its size. On the one hand, management at Bank of America seems to want to solve many of its problems; both legal and regulatory by simply throwing money at them. The chairperson and chief executive officer, Kenneth D. Lewis, has decided to resolve many of the company’s legal entanglements in this fashion to have them dealt with out of the public eye as quickly as possible (Boraks & Moyer, 2004). However, at the same time the Bank of America has spent considerable effort in expanding its physical assets through a series of mergers and acquisitions of other banking institutions, all the while cutting personnel to improve profit margins. Taken together these efforts (at

Traditional risk management deals with hazard risks to the organization. Hazard risks, or negative risks, are transferred through of through the use of insurance or to an external party (Elliott, 2012). A CRO must align the objectives of the risk management program with the objectives of the organization. This involves understanding the tolerable uncertainty or risk tolerance that the management can handle. If the bank management tends to be very conservative and risk adverse, then the risk management program will have to take that into account especially in areas of insurable hazard risks. When an organization is assessing hazard risks using traditional risk management techniques, the CRO is evaluating risks based solely upon the event in question and its probability of occurrence without any regard to interdependence on other factors (Elliott, 2012). Three hazard risks that the management program has prioritized are the risks of property loss, of workplace violence, and of business interruption.

Emphasis on understanding on the real problem and problems complained by customers and at the same time the Bank has to protect the interest of the shareholder.

Financial and occurrence-oriented risks are the responsibility of the corporate risk manager; his defining duties are to ensure the reported content and identified measure for the risks are credible. The corporate audit team initiates reviews for the identified risks as part of their internal control process. They function to validate major transactions phases as well as endorse corporate risks selected by management. The auditor team controlling objectives are to stabilize major decisions involving environmental and security resources. Strategic risk encompasses significantly more leadership; corporate development teams run annual strategy review

One of the risks that could have an impact on the corporate financial strategy of an entity is business risk which Bender and Ward (2012) define as "the inherent risk associated with the underlying nature of the particular business and the specific competitive strategy that is being implemented" (p.51). Business risks could arise from events that take place inside or outside the organization. An entity with a significantly high business risk according to Bender and Ward (2012) must not "adopt a financial strategy that involves high financial risk" (p.51).

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