Question

What would be the relevant risks exposure and how are bank's likely to respond?

Answer 1

There are various risk exposures that are relevant such as

1. Banks are particularly exposed to the following types of risk-Credit risk, Market risk, Operational risk, Liquidity risk, Business risk, Reputational risk, Systemic risk, Moral hazard.

2. Risks that come with new types of players, new technologies, growing complexities of national and international regulations, changing consumer behavior.

3. Risks related to the country of origin of the entity to which a bank is exposed.

In response of such risk exposures, bank do the following-

1. Implementing risk management strategy and policies.

2. Implementing procedures for risk identification and measurement.

3. Maintaining effective and efficient risk management process covering all risks.

4. Adequate the process of internal capital adequacy assessment.

5. Training people to anticipate what could go wrong.