Risk Managements in the Banking Industry
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