Risk Management in Banks

Risk Management in Banks

Risk Management in Banks

All banks are currently working on paying attention to risk reports in banks. Banks reports and understand them in detail, and we will show in “Money Makers“, in detail the importance of risk management in banks.

Certified Financial Risk Management Consultant®

About risk management in banks

Risk management in banks is one of the most important departments that help achieve profits and maintain the level of banks, especially since banks are currently exposed to many difficult and complex risks as a result of technological development and new investment services. To develop the national economy and achieve profits for banks, especially commercial banks.

Risk management in banks depends on maintaining the goals of the institution and reaching its message to all customers, so it depends on realistic analysis and study of all mathematical models, and the selection of successful experiences and models that help achieve the goals of the institution and provide a distinctive banking environment, whether in professionalism or the bank’s entry into the international banking market To achieve the competitor and abide by the rules and laws in light of the openness and development facing all banking banks in order to preserve them from the risks they face, by identifying them, identifying them and knowing how to confront them and measuring the appropriate decision criteria taken by the banks’ management in order to confront these risks in order to achieve gains.

Risk management in banks aims to identify the most important risks that banks are exposed to and expected to occur, in order to plan and develop decisions that help to deal with and treat them, in order to prevent negative exposure and turn it into an opportunity to benefit from it and achieve the objectives of banks in maintaining customers, achieving profits and maintaining their reputation in the market International.

The most important risks facing risk management in banks

There is a set of important risks that affect banks significantly and help to realize the importance of risk management in reducing, monitoring, and analyzing them to develop plans that help to confront them and among the risks.

Market risk

These are the first and most difficult risks that management depends on monitoring, analyzing, and following up on all changes that occur to it, given that the market is changing and exposed to many factors affecting it, including risks related to revenues and changes that occur in exchange rates and securities, in addition to changes in interest and commodity prices, And the market’s link with the international market and the state’s economic decisions as well, which is one of the most difficult risks faced by banks, which are continuously studied and followed up, in order to preserve the banks’ continuity.

Liquidity risk

Which is the main factor on which the banks are based, which is to study the financial obligations that must be paid for, and to preserve the Egyptian’s ability to abide by his promises on the specified dates, especially in the short term, while identifying these risks before they actually occur and the banks’ exposure to deficit or bankruptcy, Therefore, it is necessary to rely on the follow-up of all banking activities, including revenues, expenses, and all calculations, and try to find a quick remedy for them.

Operational risk is one of the most important factors affecting the achievement of profits and the success of banks. It is based on the supervisory role within the organization, whether on the people or systems operating within it, in addition to monitoring the external conditions and factors affecting the operation process, and the risks resulting from unexpected losses and exposure to embezzlement or fraud from Some people, which exposes banks to bankruptcy, and therefore the risk management works to analyze and study all the circumstances affecting to maintain the reputation and prestige of the organization, and to achieve its objectives.

Strategic risk

Which occurs as a result of exposure to the implementation of wrong decisions that affect the nature of work and banking activity within banks, which is one of the negative risks that casts a shadow on all decisions applied by management in banks, and the risk management works to study these risks in order to find suitable opportunities to convert them to a positive Instead of robbery, with recognition and striving to implement new ideas and plans that open new markets and make decisions in the interest of the organization.

Legal and Regulatory Risks

Oversight works to discover a number of errors in which the organization is located, so due precautions must be taken, while identifying all laws to anticipate the presence of some violations or non-application of laws, which negatively affect the organization, so it is necessary to study and know all the laws and foundations of each country in which it is established Banks, which exposes banks to legal risks in the event of violations committed by institutions while studying changing laws and what negatively affects the banking system to know the risks and avoid exposure to losses.

Principles of risk management in banks

There is a set of foundations and principles that banks rely on to achieve balance within banks in order to avoid exposure to losses.

Maintaining the bank’s strength amid the risks to which it is exposed. Risk management in banks works to maintain the achievement of banks’ goals and to control all risks to which banks are exposed and affected by other departments.

Preserving the bank’s reputation and standing in competition with other banks, by following clear methods and organizing all supervision and control over the risks to which the bank is exposed, preventing the negative impact that affects its reputation and exposes it to defamation in its name and reputation.

Reducing the negative impact resulting from other departments in banks, by monitoring these risks and developing plans that help eliminate the risks facing the bank in order to maintain its efficiency and its various activities.

Ensuring the supervisory role of the bank’s activities, in order to ensure the implementation of all rules, laws, and sound activities to play the role of everyone in the banks, to achieve the required objectives.

Emphasis on the principle of openness and transparency provided by the risk management in banks directs the senior management of the bank to take measures that help to eliminate risks and reduce their negative impact on them, and to make sound decisions.

Risk management in banks works on applying the previous principles in order to maintain a balance between risks and return that helps achieve the objectives of the organization. And the limits of affiliation with which it deals within the bank.

It also requires the management’s employees to be flexible in dealing with all departments within the bank in order to be in line with the various activities of the bank, study the work climate and maintain the implementation of the procedures to be implemented, to monitor the expected risks, whether internal or external, to submit a detailed report to the management to develop specific plans to transform this impact Negative influence can lead to a positive effect that helps achieve the bank’s goals, compete among other banks, and achieve local and international standing as well.