7/26/2019 Risk Analyse Technique
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Risk Management in BankingIn the course of their operations,
banks are invariably faced with different types of risks
that may have a potentially negative effect on their business.
Risk management in bank
operations includes risk identification, measurement and
assessment, and its objective isto minimize negative effects risks
can have on the financial result and capital of a bank.
Banks are therefore required to form a special organizational
unit in charge of risk
management. lso, they are required to prescribe procedures for
risk identification,measurement and assessment, as well as
procedures for risk management.
!he risks to which a bank is particularly e"posed in its
operations are# liquidity risk,
credit risk, market risks $interest rate risk, foreign e"change
risk and risk from change inmarket price of securities, financial
derivatives and commodities%, e"posure risks,
investment risks, risks relating to the country of origin of the
entity to which a bank is
e"posed, operational risk, legal risk, reputational risk and
strategic risk.
Liquidity riskis the risk of negative effects on the financial
result and capital of the bank
caused by the bank&s inability to meet all its due
obligations.
Credit riskis the risk of negative effects on the financial
result and capital of the bankcaused by borrower&s default on
its obligations to the bank.
Market riskincludes interest rate and foreign e"change risk.
Interest rate riskis the risk of negative effects on the
financial result and capital of the
bank caused by changes in interest rates.
Foreign exchange riskis the risk of negative effects on the
financial result and capital ofthe bank caused by changes in
e"change rates.
special type of market risk is the risk of change in the market
priceof securities,
financial derivatives or commodities traded or tradable in the
market.Exposure risksinclude risks of bank&s e"posure to a
single entity or a group of related
entities, and risks of banks& e"posure to a single entity
related with the bank.
Investment risksinclude risks of bank&s investments in
entities that are not entities in the
financial sector and in fi"ed assets.
Risks relating to the country of origin of the entity to which a
ank is exposed$country risk% is the risk of negative effects on the
financial result and capital of the bank
due to bank&s inability to collect claims from such entity
for reasons arising from
political, economic or social conditions in such entity&s
country of origin. 'ountry riskincludes political and economic
risk, and transfer risk.
!perational riskis the risk of negative effects on the financial
result and capital of thebank caused by omissions in the work of
employees, inadequate internal procedures andprocesses, inadequate
management of information and other systems, and unforeseeable
e"ternal events.
Legal riskis the risk of loss caused by penalties or sanctions
originating from court
disputes due to breach of contractual and legal obligations, and
penalties and sanctions
pronounced by a regulatory body.
