Integrated risk measurement system in commercial bank
Integrated risk management means the comprehensive and effective management all significant risks (affecting the bank's activities) and their interrelation, including building a corporate culture of risk management and integrating risk management into strategic planning. The significant risks h...
Gespeichert in:
| Veröffentlicht in: | Risk assessment and financial regulation in emerging markets' banking |
|---|---|
| 1. Verfasser: | |
| Weitere Verfasser: | |
| Format: | UnknownFormat |
| Sprache: | eng |
| Veröffentlicht: |
2021
|
| Schlagworte: | |
| Tags: |
Tag hinzufügen
Keine Tags, Fügen Sie den ersten Tag hinzu!
|
Tag hinzufügen | Zusammenfassung: | Integrated risk management means the comprehensive and effective management all significant risks (affecting the bank's activities) and their interrelation, including building a corporate culture of risk management and integrating risk management into strategic planning. The significant risks have big impact on the financial result of the bank, its capital, and liquidity, business reputation, their consideration is required for the assessment of banking creditworthiness and stability for regulators. In the context of economic crises and sanctions, the role of effective risk management in banks is significantly increasing, as it allows the bank to adequately distribute its capital and reserves and contributes to its stable existence in the face of uncertainty. The most significant risks in banking are credit and liquidity risks. In the banking sector, a significant methodological base has now been accumulated for assessing and managing these types of risks. The purpose of this study is to systematize the approaches to the formation of a risk management system in Russian and world practice, to assess their advantages and disadvantages, and also to formulate a list of recommendations for improving the existing system. Decision-making at management levels takes place in conditions of uncertainty in the external and internal environment, which causes partial or complete uncertainty in the final results of activities. In economics, uncertainty is understood as incompleteness or inaccuracy of information on the conditions of economic activity, including the costs and the results. The causes of uncertainty are three main factors: ignorance, randomness, and competition. In particular, the uncertainty is explained by the fact that the problems are reduced to the tasks of choosing from a certain number of alternatives, while the banks do not have full knowledge of the situation to work out the optimal solution, and do not have the resources to adequately account for all the information available to them. A measure of uncertainty is risk, i.e. the probability of occurrence of events, as a result of which unexpected losses of income, property, cash, and other assets are possible. In modern banking risk management systems, procedures for influencing individual risk events or types of risk are increasingly being replaced by the organization of continuous monitoring of the bank's aggregate risk and the management of the value of various businesses of a credit institution adjusted for their inherent risk. This conceptual approach is called Integrated Risk Management (IRM). In the international banking regulation standards, the IRM logic is disclosed by the requirements of Component 2 of the Basel II and Basel III agreements (BKBN 2004, 2010), in Russian practice - Bank of Russia Ordinance No. 3624-U "On requirements for the risk and capital management system credit organization and banking group" (Bank of Russia, On Requirements for the Risk and Capital Management System of a Credit Institution and a Banking Group, 2015). |
|---|---|
| ISBN: | 9783030697471 |