Review of developments in banking and finance in the third and fourth quarters of 2010


2.0 Concept of Risk Management and Empirical Surveys 36; 3.0 Analysis of the Survey 42; 4.0 Summary of Findings 64; 5.0 Conclusion 68; 6.0 References 68;

Banks in the process of financial intermediation are involved in the allocation of scarce savings and the management of risk. In the process they are confronted with various types of financial and non- financial risks viz. credit, interest rate, foreign exchange rate, liquidity, equity price, commodity price, legal, regulatory, reputational, operational etc. These risks are highly interdependent and events that affect one area of risk can have ramifications for a range of other risk categories. For this reason considerable importance is attached to the improved ability of top management of banks to identify, measure, monitor, and control the overall level of risks undertaken.