Risk management in banks

Type :

Term papers

Pages :

9 pages

Format :

.doc

Published date :

09/21/2009

Category :

Economics & finance

Sub category :

Finance

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Summary :

Introduction
Meaning of risk
Major types of bank risks
A brief on risk management
1. Objectives of risk management
Basel core principles on risk management
1. The Basel committee, Basel - I, Basel - II
Basel - II and Its basic architecture
1. Minimum capital requirement, supervisory review process, market discipline
2. Impact of Basel - II
3. Challenges and issues
4. Conclusion
Analysis of risk management in banks
1. Research methodology
2. Selection of the sample
3. Responses from managers in banking groups
4. Analysis of credit risk assessment system
5. Analysis of operational risk assessment system
6. Supervisory review process
Conclusion
Bibliography

Abstract

Banking is the business of money where high risks are involved. Regulation and globalization have introduced few types of risks. risk may be defined as an exposure to a transaction with loss, which occurs with some probability and which can be expected, measured and minimized. An element of risk is inherent in the banking operations. banks have to manage and balance risks.

risk management is the practice of defining the risk level an institution desires, identifying the risk level the institution has and using derivatives and such other financial instruments to control and adjust the level of risk that the institution is expected to bear.

It would be interesting to know in what way the need to develop some regulatory framework was thought of. The risk that arose due to time difference in settlement of foreign exchange payments known as 'Herstatt risk' compelled monetary authorities to consider the need to develop some regulatory framework for banks. To minimize such risk arising out of The Herstatt Accident that occurred in June 1974, the G-10 (now called G-13) was compelled to sit down to form the Basel Committee on Banking Supervision (BCBS) towards the end of 1974.