Banking risk management

A special assessment procedure that aims at tackling uncertain consequences of human activities is called risk assessment (RA). The main objective of risk assessment is to use the best available information and knowledge for identifying hazards, estimating the risks and making recommendations for risk management (World Bank, 1997). 

Westrum, R. (1988). Organisational and inter-organisational thought. World Bank Workshop on Safety Control and Risk Management. Washington D.C., October,... 

There is little doubt that the identification and control of hazardous chemicals is necessary to protect human health and the environment. An assessment of the occupational health benefits of REACH estimates that improved chemical risk assessment and risk management can reduce compensation for worker-related illness by between 18 and 54 billion over a 30-year period [190]. The long-term benefits of improved environmental protection resulting from the identification of hazardous chemicals under REACH (e.g., avoided costs for carrying out environmental remediation) can readily result in savings of hundreds of million Euro per substance [190]. Based on World Bank estimates that chemicals and chemical pollution causes between 0.6% and 2.5% of diseases in developed countries, the European Commission calculated a saving of 50 billion on health and medical care within the EU over 30 years could result if REACH can reduce the occurrence of disease by 0.1% [282]. 

Bmnel University. He is Founder of The Certificate of Bank Treasury Risk Management (BTRM). 

Caps and floors are options on interest rates such as LIBOR, euribor, U.S. prime, and the commercial paper rate. A cap is a call option on interest rates, written by a market-making bank and sold to the borrower of a cash loan. In return for the premium, the bank agrees that if the reference rate rises above the cap level, it will pay the buyer the difference between the two. The cap thus places an upper limit on the rate the borrower must pay. The loan may precede the cap transaction and be with a third party. Alternatively, the cap may be transacted alongside the loan, or as part of it, as a form of interest rate risk management. In that case, the cap s notional amount will equal the loan amount. The cap term can be fairly long to match the loan term—commonly as much as ten years. 

Bessis, J. 1998. Risk Management in Banking. Chichester John Wiley Sons, 17-18. 

Risk management seeks to identify and reduce all types of losses either completely or to an acceptable level at the lowest possible cost. Some organizations have risk managers, who analyze potential losses, such as financial losses and fire, weather, operations, security, legal, and other losses. They often purchase insurance to transfer potential losses. They work for banks, insurance companies, hospitals, health care facilities, and other businesses. They may also work with safety and health specialists on preventive strategies and approaches. 

Gurenko, Eugene, and Rodney Lester. 2004. Rapid Onset Natural Disasters The Role of Financing in Effective Risk Management. Pohcy Research Working Paper 3278. Washington, DC World Bank. 

Holzmann, Robert, and Steen Jorgensen. 2000. Social Risk Management A New Conceptual Framework for Social Protection and Beyond. Social Protection Discussion Paper 0006. Washington, DC World Bank. 

Sadoulet, Ehsabeth, Frederico Finan, Alain de Janvry, and Renos Vakis. 2004. Can Conditional Cash Transfer Programs Improve Social Risk Management Social Protection Discussion Paper 0420. Washington DC World Bank. 

Westrum R. (1998). Organisational and intra-organisational thought. World Bank Conference on Safety Control Risk Management, October 1988. 

Asian Development Bank (2007) Capacity Building for Resettlement Risk Management People s Republic of China Country Report. Manila Asian Development Bank. 

Positions that had been held on the trading book of some banks became difficult to value and risk manage due to the withdrawal of liquidity. Some risk measurement systems did not make sufficient allowance for the risk of significant credit spread widening and credit migration, since they referred to risk data sets for the previous two to three years before 2007, which showed a fairly stable credit environment. 

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