tailieunhanh - Risk Management In Banks: R.S. Raghavan

The aim of this first exercise, of an aggregate nature, was to give an overall capital figure for the whole of the Spanish banking system. The analysis was top-down, as the information used enabled a sufficiently precise estimate to be made for the whole of the banking system, but was not sufficiently granular to provide for individual bank estimates. As a result, this exercise gave rise to recapitalisation needs for the system of between €16 billion and €26 billion under the baseline scenario and of between €51 billion and €62 billion under the adverse scenario, for all the banks considered | Management I Risk Management In Banks . Raghavan E X E C U T I V E S U M M A R Y Risk is inherent in any walk of life in general and in financial sectors in particular. Till recently due to regulated environment banks could not afford to take risks. But of late banks are exposed to same competition and hence are compeled to encounter various types of financial and non-financial risks. Risks and uncertainties form an integral part of banking which by nature entails taking risks. There are three main categories of risks Credit Risk Market Risk Operational Risk. Author has discussed in detail. Main features of these risks as well as some other categories of risks such as Regulatory Risk and Environmental Risk. Various tools and techniques to manage Credit Risk Market Risk and Operational Risk and its various component are also discussed in detail. Another has also mentioned relevant points of Basel s New Capital Accord and role of capital adequacy Risk Aggregation Capital Allocation and Risk Based Supervision RBS in managing risks in banking sector. BACKGROUND he etymology of the word Risk can be traced to the Latin word Rescum meaning Risk at Sea or that which cuts. Risk is associated with uncertainty and reflected by way of charge on the funda mental basic . in the case of business it is the Capital which is the cushion that protects the liability holders of an institution. These risks are inter-dependent and events affecting one area of risk can have ramifications and penetrations for a range of other categories of risks. Foremost thing is to understand the risks run by the bank and to ensure that the risks are properly confronted The author is member of the Institute. The views expressed herein are the personal views of the author and do not necessarily represent the views of the Institute. effectively controlled and rightly managed. Each transaction that the bank undertakes changes the risk profile of the bank. The extent of calculations that need to be .