Risk goes hand in hand which we can not separate from banking. The profit of a bank depends on the risk management of the bank as the better risk management gives better financial result and on the other hand the bad risk management puts the bank on risk and some time that may become the reason of having huge loss to the bank. The recent crisis of Yes Bank, PMC Bank etc. have shown the severity of risk management.
If we define Risk in a simple language we can say that the Risk is the probability of happening some thing bad which is not expected or desired. It means that the risk implies future uncertainty about deviation from expected outcome. Bank being a financial intermediary is exposed to various risks, primarily Credit risk, Market risk, Liquidity risk, Operational risk, Technology risk, compliance risk, Legal risk and Reputational risk. Every bank is committed to managing all the material risks and participating in opportunities as part of the strategic approach of risk calibrated growth in core operating profit with a less scope of provisions.
Major Risks which the Bank Faces:
Risks are part and parcel of the banking business which every bank faces and mitigates them with its laid down guidelines and policies in the broad framework of Reserve Bank of India. The major risks which the bank faces are:
Operational Risk: The risk which arises due to inadequate or failed internal processes, people and systems or from any external events. Major activities that comes under operational risk are Internal fraud, External fraud, Employment practices and workplace safety, Clients, Products and Processes, Damage to Physical assets of the bank, Execution and delivery of services etc.
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Denne historien er fra August 2024-utgaven av BANKING FINANCE.
Start din 7-dagers gratis prøveperiode på Magzter GOLD for å få tilgang til tusenvis av utvalgte premiumhistorier og 9000+ magasiner og aviser.
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'Deep Fake' - an emerging risk for Banking & Financial Sector
Deepfake KYC fraud is a growing concern in India, where fraudsters leverage AI-generated deepfake videos and images to bypass Know-Your-Customer (KYC) verification processes. This has significant implications for financial institutions, fintech companies, and other organizations that rely on KYC to verify the identity of their customers.
RBI CIRCULAR
Operational framework for reclassification of Foreign Portfolio Investment to Foreign Direct Investment (FDI) - November 11, 2024
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Legal News
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ICICI Bank partners with PhonePe to offer instant credit on UPI
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