The turmoil caused by problems in the American mortgage market has served as an important reminder of the interdependency of global financial institutions. This book presents a survey of the fundamental issues surrounding risk management and shows how central banks and other public investors can create better risk management systems.
The recent turmoil on financial markets has made evident the importance of efficient liquidity risk management for the stability of banks. The measurement and management of liquidity risk must take into account economic factors such as the impact area, the timeframe of the analysis, the origin and the economic scenario in which the risk becomes manifest. Basel III, among other things, has introduced harmonized international minimum requirements and has developed global liquidity standards and supervisory monitoring procedures. The short book analyses the economic impact of the new regulation on profitability, on assets composition and business mix, on liabilities structure and replacement effects on banking and financial products.a??
The existence of sound market risk management practices is crucial to promote investors confidence required for capital market development. This study would therefore help in guiding management, especially in the financial sector, in determining the best risk management strategy to be adopted by their organizations. The study will also bring to the fore, certain risk management practices that when paired with existing global events, can be detrimental to the performance of the financial sector.Both private and corporate investors will benefit from understanding the current practices of risk management in Nigeria and how these fit with recommendations in literature.
In view of growing complexity of banks’ business and the dynamic operating environment, risk management has become very significant, especially in the financial sector. Risk at the apex level may be visualized as the probability of a banks’ financial health being impaired due to one or more contingent factors. While the parameters indicating the banks’ health may vary from net interest margin to market value of equity, the factor which can cause the important are also numerous. For management of risk at corporate level, various risks like credit risk, market risk or operational risk have to be converted into one composite measure. Therefore, it is necessary that measurement of operational risk should be in tandem with other measurements of credit and market risk so that the requisite composite estimate can be worked out. So, regarding to international banking rule (Basel Committee Accords) and RBI guidelines the investigation of risk analysis and risk management in Co-Op banks is being most important.
This book presents the results of the study on influence of Environmental Risk Management on the general performance of commercial banks in Uganda. Quantitative research approaches were adopted and a method of data collection, consisting of a survey questionnaire was used. The results from the research provide some evidence that commercial banks in Uganda incorporate environmental issues into lending decisions and are aware of environmental risks and opportunities. It further revealed that good Environmental Risk Management(ERM)contributes to better overall performance of banks and that consideration of environmental issues when making lending decisions is important to banks. The study recommended development and implementation of a comprehensive environmental risk management system and frameworks, adoption environmental management procedures, adoption of appropriate strategy and consideration of structured community participation in monitoring funded projects for enhancing ERM.
Capital adequacy requirements are the rules that help bank supervisors determine whether banks hold sufficient capital at all times to meet unexpected losses. The banking industry had moved ahead with its risk assessment technique, economic capital models and risk based pricing. The turmoil in banking industry has provided an opportunity to examine the robustness of risk assessment techniques and economic capital models.This book provides a good understanding of the reasons behind bank failures, risk assessment techniques, economic capital models and risk based pricing that reduce the risk of future failures. The importance of risk management of commercial banks in terms of capital measurement has been emphasized throughout.The prime objective of the book is the measurement of capital of the unexpected loss for risk management of the commercial banks in order to prevent insolvency. It provides technique to quantify capital for holding on economic basis.
You bother to know how Basel II Accord is shaping the mechanics of risk management practices in Nigerian banks? Look no further. This paper chronicles some of the issues Nigerian banks have had to contend with while implementing Basel II Accord as directed by the Central Bank of Nigeria. The paper succinctly identifies the impacts of Basel II implementation in such areas as risk measurements, risk modelling, economic capital, capital allocation and management in Nigerian banks. As a professional, you will find this paper useful in appreciating how risk management mechanisms could be of help to your area of engagement. You will see how the concept of risk management affects different areas of banking business. Also as an academic or student, you will find the paper useful for your research in the areas of financial intermediation, risk management and Basel II Accord.
Present study deals with operational risks of banks (i.e. as Basel II defines “the risk of loss resulting from inadequate or failed operation of people, systems, and processes or from external events”). The complexity of financial institutions and the regulatory efforts make the analysis of the operational risk necessary. The main message of this book is that institution size has an important effect on operational risk exposure and management. Firstly, a well-behaving stylised stochastic process based approach underpins the applicability of Poisson frequency and fat-tailed loss distributions, however a method built from historical data on a small sample may result in estimation bias. Secondly similarly to the results for other countries the total operational risk losses in a given period are significantly correlated with gross income-based size of banks in Hungary as well, mainly driven by frequency. Finally, it is found that larger institutions are more inclined to use advanced operational risk management methods. This might be a favourable tendency from systemic risk point of view, as institutions with potentially higher system risk tend to apply more conscious risk management.
Risk Management, the process of measuring the risks, controlling them and implementing measures in order to achieve the desired risk profile, is fundamental to all aspects of a bank’s activities. Due to the liberalization of financial markets, advances in technology and the various risks brought by these developments, the way that banks practice Risk Management has substantially changed during the last years. The important role that an effective Risk Management plays in ensuring banks’ profitability and continuity is widely proven. This survey was conducted to provide a status position on the extent to which Risk Management is practiced by banks in North Cyprus. The survey revealed that risk management systems in TRNC banks are relatively underdeveloped and there is a low level of awareness in banks on the importance of employing an integrated Risk Management framework. There are various gaps that demonstrate the need for developing Risk Management in TRNC banking sector and employing innovative Risk Management tools to manage the risks, non-credit risks in particular.
The present study has focused on following aspects. First, an attempt has been made to examine the importance given to various types of risks being faced by Indian banks. Second, to study the risk management framework among banks, the study examines the size and ownership effect on the Risk Management Practices in banks. Third, we enumerate the growth and performance of banking sector in India since implementation of Basel I. Last issue undertaken in this study is to put forth the major challenges that are being faced by banks in India with the implementation of Basel II Accord and to suggest the procedures to face these challenges.
Investors typically face problems when they are in position of deciding on capital investments to be undertaken. Problems they face are related primarily with evaluation of the project, and secondarily with risk related to the project that is supposed to be undertaken. This book introduces methods of capital budgeting investment criteria, in order to choose the best project, by applying some of the risk management methods that are offered. At the very end of the book, practical examples of capital investment and risk management are presented, on a case done on legislative regulations on minimum standards of risk management in commercial banks.
In Banking, Asset and Liability Management (often abbreviated ALM) is the practice of managing risks that arise due to mismatches between the assets and liabilities (debts and assets) of the bank. Banks face several risks such as the liquidity risk, interest rate risk, credit risk and operational risk. Asset liability management (ALM) is a strategic management tool to manage interest rate risk and liquidity risk faced by banks, other financial services companies and corporations. Banks manage the risks of asset liability mismatch by matching the assets and liabilities according to the maturity pattern or the matching of the duration, by hedging and by securitization. . Modern risk management now takes place from an integrated approach to enterprise risk management that reflects the fact that interest rate risk, credit risk, market risk, and liquidity risk are all interrelated.
In research performed I watched to present methods of classification of loans and methods of establishing internal ratings within the banks. The result of the method of classifying assets consists in identifying good quality loans and their separation by the nonperforming loans. I also conducted an analysis of the situation of currency risk in case of the commercial banks. Thus I determined a set of indicators that can be measured both at the level of territorial units as well as the level of Central Bank. Another important issue addressed in the paper is the importance of ensuring solvency of the bank in overtaking difficulties generated by the financial crisis. In the chapter relating to the measurement the risk of interest rate I identified a technique used in banking to reduce interest rate risk, named GAP model or model of discrepancy between assets and liabilities of banks. In terms of reduction of the liquidity risk I presented a method that allows monitoring the indicators of liquidity on maturity bands. In the chapter concerning to management of the operational risk I presented a new method for managing this type of risk, respectively the insurance of operational risk.
This book has two themes: Private Banking and investment decisions regarding Structural Financial Products. Dr. Dimitris Chorafas examines in a rigorous way whether structured financial products are advisable investments for retail and institutional investors and, if yes, which risks they entail. As our society becomes increasingly affluent, and state-supported pension schemes find it difficult to survive, a growing number of high net-worth individuals, and families, have become retail investors - looking for ways and means to optimize wealth management, and Private Banking deals with these sorts of clients. Private banking also deals with clients that are institutional investors, such as pension funds, mutual funds, and insurance companies, as well as not-for-profits, foundations and companies explicitly set up for wealth management. Both institutional and retail investors are being offered by the banks they work with structured products. Typically, these are securities that provide them with a redemption amount, with may be either with full or partial capital protection, and some type of return. The book examines structured financial products, their polyvalent nature, and the results which could be expected from them. Return on structural instruments, which are essentially derivatives, is paid in function of a specific investment strategy on selected underlying asset(s). This essentially means on the performance of the underlyings, obtained by asset managers, which may be banks or hedge funds, through purchase or sale of embedded options. But there are risks. Both risk and return from structured products are related to three main issues: the volatility of future value of an underlying, the uncertainty of future events, and the exposure of the product. Every type of investment is subject to market forces, and the more leveraged a portfolio is, the greater will probably be both the assumed risk and the expected reward. The fact that structured financial products appeal, or at least are being marketed, to both retail investors and institutional investors makes the dual approach deliberately chosen in this book most advisable. This book addresses all these issues in a practical manner with numerous case studies and real-world examples drawn from the author's intensive research.
Human Resource Management holds a key position in any scheme of economic development in any country because the developmental process is the sum total of our productive efforts, guided, managed and executed through our human resource. It is an approach; a point of view a new technique of thinking and a philosophy of management which is concerned not only with managing people but also with solving the human problems of an organization intelligently and equitably and in a manner which ensure that employees potential is properly developed, that maximum satisfaction is desired by them from their work, that the objective of the organization are achieved. In this research work an effort has been made to study Human Resource Management practices in selected Public Sector Banks of Udaipur District in India. The Study is divided in to seven chapters in which main focus is on Human Resource Management practices in public sector banks, It also includes the study of manpower planning recruitment and selection in public sectors banks. The authors feel that the research work would be helpful for academicians, Policy makers and research scholars.