| Risk Management is a hot topic in the
| |
| | the most cost-effective and productive
|
| financial sector especially in the light
| |
| | internal controls.III. Control
|
| of the recent losses of some
| |
| | Activities,Control activities mean the
|
| multinational corporations e.g. collapses
| |
| | structure, policies, and procedures,
|
| of Britain's Barings Bank, WorldCom and
| |
| | which an organization establishes so that
|
| also due to the incident of 9/11. Rapid
| |
| | identified risks do not prevent the
|
| changes in business condition,
| |
| | organization from reaching its
|
| restructuring of organizations to cope
| |
| | objectives.
|
| with ever increasing competition,
| |
| | Policies, procedures, and other items
|
| development of new products, emerging
| |
| | like job descriptions, organizational
|
| markets and increase in cross border
| |
| | charts and supervisory standards, do not,
|
| transactions along with complexity of
| |
| | of course, exist only for internal
|
| transactions has exposed Financial
| |
| | control purposes. These activities are
|
| Institutions to new risks dimensions.
| |
| | basic management
|
| Thus the concept of risk has captured a
| |
| | practices.IV. Information and
|
| growing importance in modern financial
| |
| | Communication, andOrganizations must be
|
| society.By facilitating transactions and
| |
| | able to obtain reliable information to
|
| making credit and other financial
| |
| | determine their risks and communicate
|
| products available, the financial sector
| |
| | policies and other information to those
|
| is a crucial building block for private
| |
| | who need it. Information and
|
| as well as public sector development. In
| |
| | communication, the fourth component of
|
| its broadest definition, it includes
| |
| | internal control, articulates this
|
| everything from banks, stock exchanges,
| |
| | factor.V. MonitoringLife is change;
|
| and insurers, to credit unions,
| |
| | internal controls are no exception.
|
| microfinance institutions and
| |
| | Satisfactory internal controls can become
|
| moneylenders. As an efficient service
| |
| | obsolete through changes in external
|
| provider, the financial sector
| |
| | circumstances. Therefore, after risks are
|
| simultaneously fulfils an important
| |
| | identified, policies and procedures put
|
| function in the overall economy. Various
| |
| | into place, and information on control
|
| types of Financial Institutions actively
| |
| | activities communicated to staff,
|
| working in Financial Sectors include
| |
| | superiors must then implement the fifth
|
| Banks, DFIs, Micro Finance Banks, Leasing
| |
| | component of internal control,
|
| Companies, Modarabas, Assets Management
| |
| | monitoring.Even the best internal control
|
| Company, Mutual Funds, etc.Thus today's
| |
| | plan will be unsuccessful if it is not
|
| operating environment demands systematic
| |
| | followed. Monitoring allows the
|
| and more integrated risk management
| |
| | management to identify whether controls
|
| approach.Risk:Risk by default has tow
| |
| | are being followed before problems occur.
|
| components; uncertainty and exposure. If
| |
| | In the same way, management must review
|
| both are not present, there is no risk.
| |
| | weaknesses identified by audits to
|
| Definition of Risk as per Guidelines on
| |
| | determine whether related internal
|
| Risk Management issued by State Bank of
| |
| | controls need revision.Tools for
|
| Pakistan is, "Financial risk in a banking
| |
| | Monitoring of RiskManagement Information
|
| organization is possibility that the
| |
| | SystemM.I.S or Management Information
|
| outcome of an action or event could bring
| |
| | System is the collection and analysis of
|
| up adverse impacts. Such outcomes could
| |
| | data in order to support management's
|
| either result in a direct loss of
| |
| | decision with respect to the achievement
|
| earnings / capital or may result in
| |
| | of objectives mentioned in the policies
|
| imposition of constraints on bank's
| |
| | and procedures and the control of various
|
| ability to meet its business objectives.
| |
| | risks therein.It is this area i.e. M.I.S,
|
| Such constraints pose a risk as these
| |
| | where I.T can play a vital and effective
|
| could hinder a bank's ability to conduct
| |
| | role as with the help of I.T large
|
| its ongoing business or to take benefit
| |
| | information may be analyzed efficiently
|
| of opportunities to enhance its
| |
| | and with accuracy, so that effective
|
| business."Types of Risks:Risks are
| |
| | decision may be taken by the management
|
| usually defined by the adverse impact on
| |
| | without the loss of any
|
| profitability of several distinct sources
| |
| | time.Asset-Liability Management Committee
|
| of uncertainty. More or less all
| |
| | (ALCO)In most cases, day-to-day risk
|
| financial institutions have to manage the
| |
| | assessment and management is assigned to
|
| following faces of risks:1. Credit Risk
| |
| | a specialized committee, such as an
|
| 2. Market Risk
| |
| | Asset-Liability Management Committee
|
| 3. Liquidity Risk
| |
| | (ALCO). Duties pertaining to key elements
|
| 4. Operational Risk
| |
| | of the risk management process should be
|
| 5. Country Risk
| |
| | adequately separated to avoid potential
|
| 6. Legal Risks
| |
| | conflicts of interest - in other words, a
|
| 7. Compliance Risk
| |
| | financial institution's risk monitoring
|
| 8. Reputational RiskBroadly speaking
| |
| | and control functions should be
|
| there are four risks as per Risk
| |
| | sufficiently independent from its
|
| Management Guidelines which surround
| |
| | risk-taking functions. Larger or more
|
| Financial Sector i.e. Credit Risk, Market
| |
| | complex institutions often have a
|
| Risk, Liquidity Risk and Operational
| |
| | designated, independent unit responsible
|
| Risk. These risk are elaborated here
| |
| | for the design and administration of
|
| under:i. Credit RiskThis is the risk
| |
| | balance sheet management, including
|
| incurred in case of a counter-party
| |
| | interest rate risk. Given today's
|
| default. It arises from lending
| |
| | widespread innovation in banking and the
|
| activities, investing activities and from
| |
| | dynamics of markets, banks should
|
| buying and selling financial assets on
| |
| | identify any risks inherent in a new
|
| behalf of others. This risk is associated
| |
| | product or service before it is
|
| with financing transactions
| |
| | introduced, and ensure that these risks
|
| i.e.:a. Default in repayment by the
| |
| | are promptly considered in the assessment
|
| borrower and
| |
| | and management process.Corporate
|
| b. Default in obliging the commitment by
| |
| | Governance PrinciplesCorporate governance
|
| another Financial Institution in case of
| |
| | relates to the manner in which the
|
| syndicated arrangements.It is the most
| |
| | business of the organization is governed,
|
| critical risk in banking and one that
| |
| | including setting corporate objectives
|
| must be managed carefully. It is also the
| |
| | and a institution's risk profile,
|
| risk that requires the most subjective
| |
| | aligning corporate activities and
|
| judgment despite constant efforts to
| |
| | behaviors with the expectation that the
|
| improve and quantify the credit decision
| |
| | management will operate in a safe and
|
| process.ii. Market RiskMarket risk is
| |
| | sound manner, running day-to-day
|
| defined as the volatility of income or
| |
| | operations within an established risk
|
| market value due to fluctuations in
| |
| | profile, while protecting the interests
|
| underlying market factors such as
| |
| | of depositors and other stakeholders. It
|
| currency, interest rates, or credit
| |
| | is defined by a set of relationships
|
| spreads. For commercial banks, the market
| |
| | between the institution's management, its
|
| risk of the stable liquidity investment
| |
| | board, its shareholders, and other
|
| portfolio arises from mismatches between
| |
| | stakeholders.The key elements of sound
|
| the risk profile of the assets and their
| |
| | corporate governance in a bank include:a)
|
| funding. This risk involves interest
| |
| | A well-articulated corporate strategy
|
| rate risk in all of its components:
| |
| | against which the overall success and the
|
| equity risk, exchange risk and commodity
| |
| | contribution of individuals can be
|
| risk.iii. Liquidity RiskThe liquidity
| |
| | measured.b) Setting and enforcing clear
|
| risk is defined as the risk of not being
| |
| | assignment of responsibilities,
|
| able to meet its commitments or not being
| |
| | decision-making authority and
|
| able to unwind or offset a position by an
| |
| | accountabilities that are appropriate for
|
| organization in a timely fashion because
| |
| | the bank's risk profile.c) A strong
|
| it cannot liquidate assets at reasonable
| |
| | financial risk management function
|
| prices when required.iv. Operational
| |
| | (independent of business lines), adequate
|
| RiskThis risk results from inadequacies
| |
| | internal control systems (including
|
| in the conception, organization, or
| |
| | internal and external audit functions),
|
| implementation of procedures for
| |
| | and functional process design with the
|
| recording any events concerning bank's
| |
| | necessary checks and balances.d)
|
| operations in the accounting system
| |
| | Corporate values, codes of conduct and
|
| information systems.Need for Risk
| |
| | other standards of appropriate behavior,
|
| Management and Monitoring:There are a
| |
| | and effective systems used to ensure
|
| number of reasons as to why there is so
| |
| | compliance. This includes special
|
| much emphasis given to Risk Management in
| |
| | monitoring of a bank's risk exposures
|
| Financial Sector now a day. Some of them
| |
| | where conflicts of interest are expected
|
| are listed below: -1. Present structure
| |
| | to appear (e.g., relationships with
|
| of joint stock companies, wherein owners
| |
| | affiliated parties).e) Financial and
|
| are not the mangers, hence risks
| |
| | managerial incentives to act in an
|
| increase; therefore proper tools are
| |
| | appropriate manner offered to the board,
|
| required to achieve the desired results
| |
| | management and employees, including
|
| by covering the risks.
| |
| | compensation, promotion and penalties.
|
| 2. The financial sector has come out of
| |
| | (i.e., compensation should be consistent
|
| simple deposit and lending function.
| |
| | with the bank's objectives, performance,
|
| 3. The world has become very complex so
| |
| | and ethical values).f) Transparency and
|
| the financial transactions and
| |
| | appropriate information flows internally
|
| instruments.
| |
| | and to the public.Tools mentioned above
|
| 4. Increase in the number of cross
| |
| | can be utilized in identifying and
|
| border transactions which caries its own
| |
| | managing different risks in the following
|
| risks.
| |
| | manner:I. Credit RiskIt is managed by
|
| 5. Emerging markets
| |
| | setting prudent limits for exposures to
|
| 6. Terrorism RemittancesRisk monitoring
| |
| | individual transaction, counterparties
|
| in financial sector is very crucial and
| |
| | and portfolios. Credits limits are set by
|
| an inevitable part of risk management.
| |
| | reference to credit rating established by
|
| Risk Monitoring is important in the
| |
| | Credit Rating Agencies, methodologies
|
| financial sector due to the following
| |
| | established by Regulators and as per
|
| reasons:1. Deals in others' money
| |
| | Board's direction.- Monitoring of per
|
| 2. Direct stake of deposit holder.
| |
| | party exposure
|
| 3. Much riskier sector than trading and
| |
| | - Monitoring of group exposure
|
| manufacturing.
| |
| | - Monitoring of bank's exposure in
|
| 4. Previous / Recent problems faced by
| |
| | contingent liabilities
|
| banks i.e. stuck portfolio that is credit
| |
| | - Bank's exposure in clean facilities
|
| risk.
| |
| | - Analysis of bank's exposure product
|
| 5. Bankruptcy of Barings Bank due to
| |
| | wise
|
| short selling / long position that is
| |
| | - Analysis of concentration of bank's
|
| market risk.
| |
| | exposure in various segments of economy
|
| 6. Operational risk does not has
| |
| | - Product profitability
|
| immediate impact, but important for
| |
| | reportsII. MarketFinancial Institutions
|
| continuity and progress of organization.
| |
| | should also have an adequate system of
|
| 7. Appetite of a financial institution
| |
| | internal controls to oversee the interest
|
| to take risk is related with the capital
| |
| | rate risk management process. A
|
| base of the institute so it caries a huge
| |
| | fundamental component of such a system is
|
| risk of over exposure.Components of Risk
| |
| | a regular, independent review and
|
| Management Frame WorkRisk Management
| |
| | evaluation to ensure the system's
|
| Frame Work has five components. First of
| |
| | effectiveness and, when appropriate, to
|
| all risk is Identified, then it is
| |
| | recommend revisions or
|
| Assessed to classify, seek solution and
| |
| | enhancements.Interest rate risk should be
|
| management, after assessing quick
| |
| | monitored on a consolidated basis,
|
| Response and implementation of solution
| |
| | including the exposure of subsidiaries.
|
| and the last phase is Monitoring of the
| |
| | The institution's board of directors has
|
| risk management progress and Learning
| |
| | ultimate responsibility for the
|
| from this experience that such problem
| |
| | management of interest rate risk. The
|
| never occur again. Whole process is to be
| |
| | board approves the business strategies
|
| well Communicated during the entire
| |
| | that determine the degree of exposure to
|
| process of risk management if it is to be
| |
| | risk and provides guidance on the level
|
| managed efficiently.The International
| |
| | of interest rate risk that is acceptable
|
| Organization for Standardization (ISO)
| |
| | to the institution, on the policies that
|
| has defined risk management as the
| |
| | limit risk exposure, and on the
|
| identification, analysis, evaluation,
| |
| | procedures, lines of authority, and
|
| treatment (control), monitoring, review
| |
| | accountability related to risk
|
| and communication of risk. These
| |
| | management. The board also should
|
| activities can be applied in a systematic
| |
| | systematically review risk, in such a way
|
| or ad hoc manner. The presumption is that
| |
| | as to fully understand the level of risk
|
| systematic application of these
| |
| | exposure and to assess the performance of
|
| activities will result in improved
| |
| | management in monitoring and controlling
|
| decision-making and, most likely,
| |
| | risks in compliance with board policies.
|
| improved outcomes.Structure of Risk
| |
| | Reports to senior management should
|
| ManagementDepending upon the structure
| |
| | provide aggregate information and a
|
| and operations of organization, financial
| |
| | sufficient level of supporting detail to
|
| risk management can be implemented in
| |
| | facilitate a meaningful evaluation of the
|
| different ways. Risk management structure
| |
| | level of risk, the sensitivity of the
|
| defines the different layers of an
| |
| | bank to changing market conditions, and
|
| organization at which risk is identified
| |
| | other relevant factors.The Asset and
|
| and managed. Although there are different
| |
| | Liability Committee (ALCO) plays a key
|
| layers or level at which risk is managed
| |
| | role in the oversight and coordinated
|
| but there are three layers which are
| |
| | management of market risk. ALCOs meet
|
| common to all. i.e.Risk ManagementFor
| |
| | monthly. Investment mandates and risk
|
| managing risk there are certain basic
| |
| | limits are reviewed on a regular basis,
|
| principles which are to be followed by
| |
| | usually annually to ensure that they
|
| every organization:1. Corporate level
| |
| | remain valid.Risk Management and Risk
|
| Policies
| |
| | BudgetsA risk budget establishes the
|
| 2. Risk management strategy
| |
| | tolerance of the board or its delegates
|
| 3. Well-defined policies and procedures
| |
| | to income or capital loss due to market
|
| by senior management
| |
| | risk over a given horizon, typically one
|
| 4. Dissemination, implementation and
| |
| | year because of the accounting cycle.
|
| compliance of policies and procedures
| |
| | (Institutions that are not sensitive to
|
| 5. Accountability of individuals heading
| |
| | annual income requirements may have a
|
| various functions/ business lines
| |
| | longer horizon, which would also allow
|
| 6. Independent Risk review function
| |
| | for a greater degree of freedom in
|
| 7. Contingency plans
| |
| | portfolio management.). Once an annual
|
| 8. Tools to monitor risksInstitutions
| |
| | risk budget has been established, a
|
| can reduce some risks simply by
| |
| | system of risk limits needs to be put in
|
| researching them. A bank can reduce its
| |
| | place to guard against actual or
|
| credit risk by getting to know its
| |
| | potential losses exceeding the risk
|
| borrowers. A brokerage firm can reduce
| |
| | budget. There are two types of risk
|
| market risk by being knowledgeable about
| |
| | limits, and both are necessary to
|
| the markets it operates in.Functionally,
| |
| | constrain losses to within the prescribed
|
| there are four aspects of financial risk
| |
| | level (the risk budget).The first type is
|
| management. Success depends uponA. A
| |
| | stop-loss limits, which control
|
| positive corporate culture,No one can
| |
| | cumulative losses from the mark-to-market
|
| manage risk if they are not prepared to
| |
| | of existing positions relative to the
|
| take risk. While individual initiative is
| |
| | benchmark. The second is position limits,
|
| critical, it is the corporate culture
| |
| | which control potential losses that could
|
| which facilitates the process. A positive
| |
| | arise from future adverse changes in
|
| risk culture is one which promotes
| |
| | market prices. Stop-loss limits are set
|
| individual responsibility and is
| |
| | relative to the overall risk budget. The
|
| supportive of risk taking.B. Actively
| |
| | allocation of the risk budget to
|
| observed policies and proceduresUsed
| |
| | different types of risk is as much an art
|
| correctly, procedures are powerful tool
| |
| | as it is a science, and the methodology
|
| of risk management. The purpose of
| |
| | used will depend on the set-up of the
|
| policies and procedures is to empower
| |
| | individual investment process. Some of
|
| people. They specify how people can
| |
| | the questions that affect the risk
|
| accomplish what needs to be done. The
| |
| | allocation include the following:* What
|
| success of policies and procedures
| |
| | are the significant market risks of the
|
| depends critically upon a positive risk
| |
| | portfolio?
|
| culture.C. Effective use of technologyThe
| |
| | * What is the correlation among these
|
| primary role technology plays in risk
| |
| | risks?
|
| management is risk assessment and
| |
| | * How many risk takers are there?
|
| communication. Technology is employed to
| |
| | * How is the risk expected to be used
|
| quantify or otherwise summarize risks as
| |
| | over the course of a year?Compliance with
|
| they are being taken. It then
| |
| | stop-loss limits requires frequent, if
|
| communicates this information to decision
| |
| | not daily, performance measurement.
|
| makers, as appropriate.D. Independence or
| |
| | Performance is the total return of the
|
| risk management professionalsTo get the
| |
| | portfolio less the total return of the
|
| desired outcome from risk management,
| |
| | benchmark. The measurement of performance
|
| risk managers must be independent of risk
| |
| | is a critical statistic for monitoring
|
| taking functions within the organization.
| |
| | the usage of the risk budget and
|
| Enron's experience with risk management
| |
| | compliance with stop-loss limits.
|
| is instructive. The firm maintained a
| |
| | Position limits also are set relative to
|
| risk management function staffed with
| |
| | the overall risk budget, and are subject
|
| capable employees. Lines of reporting
| |
| | to the same considerations discussed
|
| were reasonably independent in theory,
| |
| | above. The function of position limits,
|
| but less so in practice.Internal
| |
| | however, is to constrain potential losses
|
| ControlsPara one on first page of the
| |
| | from future adverse changes in prices or
|
| 'Guidelines on Internal Controls' issued
| |
| | yields.III. Liquidity RiskThe Basel
|
| by SBP provides:"Internal Control refers
| |
| | Committee has established certain
|
| to policies, plans and processes as
| |
| | quantitative standards for internal
|
| affected by the Board of Directors and
| |
| | models when they are used in the capital
|
| performed on continuous basis by the
| |
| | adequacy context.a. Allocation of capital
|
| senior management and all levels of
| |
| | into various types of business after
|
| employees within the bank. These internal
| |
| | taking into account the operational risks
|
| controls are used to provide reasonable
| |
| | i.e. disruption of business activity,
|
| assurance regarding the achievement of
| |
| | which has especially increased due to
|
| organizational objectives. The system of
| |
| | excessive EDP usage
|
| internal controls includes financial,
| |
| | b. Allocation of the capital is also
|
| operational and compliance controls."The
| |
| | made amongst various products i.e. long
|
| current official definition of internal
| |
| | term, short term, consumer, corporate
|
| control was developed by the Committee of
| |
| | etc. considering the risks involved in
|
| Sponsoring Organization (COSO) of the
| |
| | each product and its life cycle to avoid
|
| Treadway Commission. In its influential
| |
| | any liquidity crunch for which gap
|
| report, Internal Control - Integrated
| |
| | analysis is made. This is the job of ALCO
|
| Framework, the Commission defines
| |
| | c. For instance Contingent liabilities
|
| internal control as follows:"Internal
| |
| | not more than 10 times of capital,
|
| control is a process, effected by an
| |
| | d. Fund based not more than 6 times of
|
| entity's Board of Directors, management
| |
| | capital
|
| and other personnel, designed to provide
| |
| | e. Capital market operations not more
|
| reasonable assurance regarding the
| |
| | than 1 time of capital
|
| achievement of objectives in the
| |
| | f. However these limits cannot exceed
|
| following
| |
| | the regulations.
|
| categories: Effectiveness and
| |
| | g. Parameters of controls
|
| efficiency of operations.
| |
| | - Regulatory Requirements
|
| Reliability of financial
| |
| | - Board's directions
|
| reporting.
| |
| | - Prudent practicesFor liquidity
|
| Compliance with applicable laws
| |
| | management organizations are compelled to
|
| and regulations.This definition reflects
| |
| | hold reserves for unexpected liquidity
|
| certain fundamental
| |
| | demands. The ALCO has responsibility for
|
| concepts: Internal control is a
| |
| | setting and monitoring liquidity risk
|
| process. It is a means to an end, not an
| |
| | limits. These limits are set by
|
| end in itself.
| |
| | Regulatory Bodies and under Board's
|
| Internal control is effected by
| |
| | directions keeping in mind the market
|
| people. It is not policy manuals and
| |
| | condition and past experience.The Basel
|
| forms, but people at every level of an
| |
| | Accord comprises a definition of
|
| organization.
| |
| | regulatory capital, measures of risk
|
| Internal control can be
| |
| | exposure, and rules specifying the level
|
| expected to provide only reasonable
| |
| | of capital to be maintained in relation
|
| assurance, not absolute assurance, to an
| |
| | to these risks. It introduced a de facto
|
| entity's management and board.Internal
| |
| | capital adequacy standard, based on the
|
| control should assist and never impede
| |
| | risk-weighted composition of a bank's
|
| management and staff from achieving their
| |
| | assets and off-balance-sheet exposures
|
| objectives. Control must be taken
| |
| | that ensures that an adequate amount of
|
| seriously. A well-designed system of
| |
| | capital and reserves is maintained to
|
| internal control is worse than worthless
| |
| | safeguard solvency. The 1988 Basel Accord
|
| unless it is complied with, since the
| |
| | primarily addressed banking in the sense
|
| assemblance of control will be likely to
| |
| | of deposit taking and lending (commercial
|
| convey a false sense of assurance.
| |
| | banking under US law), so its focus was
|
| Controls are there to be kept, not
| |
| | credit risk.In the early 1990s, the Basel
|
| avoided. For instance, exception reports
| |
| | Committee decided to update the 1988
|
| should be followed up. Senior management
| |
| | accord to include bank capital
|
| should set a good example about control
| |
| | requirements for market risk. This would
|
| compliance. For instance, physical access
| |
| | have implications for non-bank securities
|
| restrictions to secure areas should be
| |
| | firms.Thus, the formula for determining
|
| observed equally by senior management as
| |
| | capital adequacy can be illustrated as
|
| by junior personnel.Components of
| |
| | follows:= Tier I + Tier 2 +
|
| Internal ControlsComponents of internal
| |
| | Tier 3 *- 8%
|
| control also depend upon the structure of
| |
| | .Risk-weighted Assets + (Market Risk
|
| the business unit and nature of its
| |
| | Capital Charge x 12.5)IV. Operational
|
| operation. The COSO Report describes the
| |
| | RiskTo manage this risk documented
|
| internal control process as consisting of
| |
| | policies and procedures are established.
|
| five interrelated components that are
| |
| | In addition, regular training is provided
|
| derived from and integrated with the
| |
| | to ensure that staffs are well aware of
|
| management process. The components are
| |
| | organization's objective, statutory
|
| interrelated, which means that each
| |
| | requirements.- Reporting of major/
|
| component affects and is affected by the
| |
| | unusual/ exceptional transactions with
|
| other four. These five components, which
| |
| | respect to ensuring the compliance of the
|
| are the necessary foundation for an
| |
| | principles of KYC and Anti-money
|
| effective internal control system,
| |
| | laundering measure
|
| include:I. Control Environment,Control
| |
| | - Analysis of system
|
| environment, an intangible factor and the
| |
| | problemsConclusionFor any business to
|
| first of the five components, is the
| |
| | grow and stay in the market management
|
| foundation for all other components of
| |
| | style is a key and Risk management is
|
| internal control, providing discipline
| |
| | basically the management style of
|
| and structure and encompassing both
| |
| | managing the risks.It is so important and
|
| technical competence and ethical
| |
| | that State Bank of Pakistan plans to
|
| commitment.II. Risk
| |
| | replace Prudential Regulations with Risk
|
| Assessments,Organizations exist to
| |
| | management guidelines, which will be
|
| achieve some purpose or goal. Goals,
| |
| | adopted by banks according to their size
|
| because they tend to be broad, are
| |
| | and complexity of operations.Risk is
|
| usually divided into specific targets
| |
| | inherent in every business and every
|
| known as objectives. A risk is anything
| |
| | organization has to manage it according
|
| that endangers the achievement of an
| |
| | to its size and nature of operation
|
| objective. Risk assessments is done to
| |
| | because without it no organization no
|
| determine the relative potential for loss
| |
| | organization can survive in long run.
|
| in programs and functions and to design
| |
| |
|
