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Risk Managements in the Banking Industry



Risk Managements in the Banking Industry


the framework for risk management in a bank is fundamentally no different today than it was prior to the credit crunch and recession. Indeed, the risk function lacks a certain business acumen, and continues to be considered a handbrake on growth. Chief economists and their macro perspectives are still divorced from the bank’s own strategy function. We believe that a return to managing risks—not ignoring them or believing they can be passed off—is the cure for the ailment that has hit the economy so hard. The Five Strategic methods of Risk Management is beneficial to see why the paradigm has neither been altered nor fundamentally changed in this new world order.


To make a summary, as risk is indispensable for banking business, proper assessment of risk is an integral part of a bank’s risk management system. Banks are focusing on the magnitude of their risk exposure and formulating strategies to tackle those effectively. In the context of risk management practices, the introduction of Basel II norms and its subsequent adoption by RBI is a significant measure that promises to promote sound risk management practices. BASEL II seeks to enhance the risk sensitivity of capital requirements, promote a comprehensive coverage of risks, offer a more flexible approach through a menu of options, and is intended to be applied to banks worldwide.



Moreover, the RBI has adopted a series of steps to ensure that individual banks tackle risks effectively by setting up risk management cells and also through internal assessment of their risk exposure. Apart from this, RBI has opted for on-site and off-site surveillance methods for effective risk management in the Banking institution, so that systemic risk and financial turmoil can be averted in the country.





Dr. Chao Yuang Shiang
published in Dep. of finance, Nan Hua University, Taiwan
凡事唯有投入,結果才能深入; 凡事唯有付出,結果才能傑出; 凡事唯有磨鍊,結果才能熟練; 凡事唯有不煩,結果才能不凡。
能與智者同行,你會不同凡響;能與高人為伍,你能登上巔峰。
你雖不能改變環境, 但卻可以轉換心境;你雖不能樣樣勝利,但卻可以事事盡力。
Dr. Chao Yuang Shiang (PH.D in management), Assistant Professor,Dep. of Finance & Institute of financial management, Nan Hua University.
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