scholarly journals Empirical Analysis of Financial and Non-Financial Risks of the Commercial Bank

2019 ◽  
Vol 8 (2) ◽  
pp. 101 ◽  
Author(s):  
Asie Tsintsadze ◽  
Vladimer Glonti ◽  
Lela Oniani ◽  
Tamar Ghoghoberidze
Keyword(s):  
Risk Management ◽  
Credit Risk ◽  
Operational Risk ◽  
Financial Risks ◽  
Operational Risks ◽  
Increase Risk ◽  
Method Approach ◽  
Selection Of ◽  
Regressive Analysis

Background: Activities of commercial banks are connected with numerous risks, the source of which is the internal and external processes of the bank. Objectives: Risk management science has been studying the origins of the risks, determining their impact quality and avoiding expected loss models from the 1950s. Method/Approach: Credit risk regressive analysis is based on the selection of effective factors, determination of their influence and prediction of future according to the correlation coefficient. Results/Findings: In the article, it is discussed the regressive analysis of operational risk. Conclusion: The effect of credit and operational risks on the financial results of the Bank is based on the results obtained and recommendations have been developed to increase risk management efficiency. Keywords: credit risk, operational risk, regressive analysis, risk management, forecasting.

scholarly journals Operational Risk Management in Financial Institutions: An Overview

2018 ◽  
Vol 8 (2) ◽  
pp. 11 ◽  
Author(s):  
Abdullah Aloqab ◽  
Farouk Alobaidi ◽  
Bassam Raweh
Keyword(s):  
Risk Management ◽  
Financial Institutions ◽  
Operational Risk ◽  
Risk Identification ◽  
Financial Risks ◽  
2008 Financial Crisis ◽  
Operational Risk Management ◽  
Operational Risks ◽  
International Regulations ◽  
The 2008 Financial Crisis

After the 2008 financial crisis, many attributed the crisis due to the inability of financial risks to manage operational risks. The period during and after 2008 was critical in providing insight on how vital operational risk management is essential to financial institutions and how best these risks can be managed. The study begins with an overview of the concept of risk and BASEL I, II and III and how they apply to financial institutions. Further, the paper discusses the growing need for operational risk management in the context of financial institutions taking into considerations various models and approaches used in the management of financial risks. Moreover, several pieces of literature discussed operational risks in the financial institutions. The paper also looks at the various methods of operational risk identification and management before concluding that for better management of operational risks in banks, there is the need to comply with both the national and international regulations and procedures.

scholarly journals How Can Enterprise Risk Management Help in Evaluating the Operational Risks for a Telecommunications Company?

2021 ◽  
Vol 14 (3) ◽  
pp. 139
Author(s):  
José Ruiz-Canela López
Keyword(s):  
Risk Management ◽  
Banking Sector ◽  
Operational Risk ◽  
Field Work ◽  
Risk Identification ◽  
Enterprise Risk Management ◽  
Management Tool ◽  
Self Assessment ◽  
Operational Risks ◽  
Enterprise Risk

Operational risk is defined as the potential losses resulting from events caused by inadequate or failed processes, people, equipment, and systems or from external events. One of the most important challenges for the management of the company is to improve its results through its operational risk identification and evaluation. Most of Enterprise Risk Management (ERM) scholarship has roots in the finance/risk management and insurance (RMI) discipline, mainly in the banking sector. This study proposes an innovative operational risk assessment methodology (OpRAM), to evaluate operational risks focused on telecommunications companies (TELCOs), on the basis of an operational risk self-assessment (OpRSA) process and method. The OpRSA process evaluates operational risks through a quantitative analysis of estimates which inputs are the economic impact and the probability of occurrence of events. The OpRSA method is the “engine” for calculating the economic risk impact, applying actuarial techniques, which allow estimation of unexpected losses and expected losses distributions in a TELCO. The results of the analyzed business unit in the field work were compared with standardized ratings (acceptable, manageable, critical, or catastrophic), and contrasted against the company’s managers, proving that the OpRSA framework is a reliable and useful management tool for the business, and leading to more research in other sectors where operational risk management is key for the company success.

Financial Risk Management

2016 ◽  
pp. 301-311
Author(s):  
Mirela-Madalina Stoian ◽  
Rares-Gabriel Stoian
Keyword(s):  
Risk Management ◽  
Credit Risk ◽  
Financial Markets ◽  
Financial Risk ◽  
Liquidity Risk ◽  
Financial Risks ◽  
Basic Principles ◽  
Financial Risk Management ◽  
Management Framework ◽  
Risk Management Framework

The present paper intends to serve as an introduction into the financial risk management universe. It starts with the basic assumption that performance of an organization is inseparable from the risks it is facing. Any organization should have in place the necessary tools to identify, assess and constantly measure the risks it is exposed to. The paper focuses in defining the basic principles in creating a viable risk management framework that keeps track of three major categories of identified financial risks: market risk, credit risk and liquidity risk. Emphasis is put on the models to measure these types of risks but also on the tools an organization can use in order to reduce them. The second part of the paper is dedicated to recent events that shaped and shocked financial markets and illustrate the consequences faced by organizations when risks are not properly assessed and the risk management models in place are based on dangerously unrealistic notions.

scholarly journals THE EFFECT OF OPERATIONAL RISK MANAGEMENT PRACTICES ON THE FINANCIAL PERFORMANCE IN COMMERCIAL BANKS IN TANZANIA

2016 ◽  
Vol 1 (1) ◽  
pp. 29
Author(s):  
Kerongo Maatwa Meshack ◽  
Rose Wairimu Mwaura
Keyword(s):  
Risk Management ◽  
Credit Risk ◽  
Financial Performance ◽  
Commercial Banks ◽  
Management Practices ◽  
Operational Risk ◽  
Operational Efficiency ◽  
Primary Data ◽  
Operational Risk Management ◽  
Insolvency Risk

Purpose: The purpose of the study was to determine the effect of operational risk management practices on the financial performance in commercial banks in TanzaniaMethodology: The research problem was studied by use of a descriptive research design. The population of the study consisted of all commercial banks in Tanzania. The study used the sample size of 34 commercial banks in Tanzania. Therefore all the commercial banks participated in equally. Questionnaires were the primary data collection tool in this study. The data gathered from the respondents shall be analyzed and presented using descriptive statistics.Results: The study found that the three independent variables in the study credit risk, Insolvency risk and Operational efficiency influenced the financial performance for the period under study. Credit risk Insolvency risk   and Operational efficiency influenced commercial banks financial performance for the period of study.Unique contribution to theory, practice and policy: This study therefore recommends that the commercial banks should handle their operations appropriately as the changes in the factors like Insolvency and Credit risk bring about an effect on the profitability of commercial banks hence affecting their financial performance

scholarly journals Estimation of Maximum Potential Losses for Digital Banking Transaction Risks Using the Extreme Value-at-Risks Method

Risks ◽  
2022 ◽  
Vol 10 (1) ◽  
pp. 10
Author(s):  
Moch Panji Agung Saputra ◽  
Sukono ◽  
Diah Chaerani
Keyword(s):  
Risk Management ◽  
Operational Risk ◽  
Threshold Value ◽  
System Failures ◽  
Operational Risks ◽  
Data Value ◽  
Kolmogorov Smirnov ◽  
Potential Risks ◽  
Potential Losses ◽  
Financial Transactions

The application of industry 4.0 in banking presents many challenges, with several operational risks related to downtime and timeout services due to system failures. One of the operational risk management steps is to estimate the value of the maximum potential losses. The purpose of this study is to estimate the maximum potential losses for digital banking transaction risks. The method used for estimating risks is the EVaR method. There are several steps in this study. The first step is to resample the data using MEBoot. This process is a simulation of the operational risk loss data of digital banking. Next, the threshold value is determined to obtain the extreme data value. Then, a Kolmogorov–Smirnov test is conducted to fit the data with the GPD. Afterward, the GPD parameter is estimated. Then, EVaR is calculated using a portfolio approach to obtain a combination of risk values as maximum potential losses. The analysis results show that the maximum potential loss is IDR144,357,528,750.94. The research results imply that the banks need to pay attention to the maximum potential losses of digital financial transactions as a reference for risk management. Therefore, banks can anticipate the adequacy of reserve funds for these potential risks.

scholarly journals Roles and responsibilities for managing operational risk in a banking environment

2008 ◽  
Vol 5 (3) ◽  
pp. 34-46
Author(s):  
Jackie Young
Keyword(s):  
Risk Management ◽  
Operational Risk ◽  
Main Role ◽  
Banking Supervision ◽  
Operational Risk Management ◽  
Roles And Responsibilities ◽  
Global Institutions ◽  
Basel Committee ◽  
Operational Risks ◽  
Role Players

Operational risk management is one of the fastest growing management disciplines within a banking environment as a result of various disastrous international incidents. Subsequently, various global institutions got involved in order to ensure that the effect of similar events do not negatively influence the international industries, for example, the Basel Committee on Banking Supervision regarding banks. It is, however, a known fact that operational risks are difficult to manage, as it is not easy to quantify. Therefore, it is of the utmost importance to understand the concept of operational risk management and, more specifically, the actual roles and responsibilities of various role-players within an organisation. This paper aims to identify the main role-players involved in the management of operational risk in a banking environment and to identify their specific roles and responsibilities

scholarly journals Operational Risk Management in A Commercial Bank

2018 ◽  
Vol 7 (4.36) ◽  
pp. 524
Author(s):  
I. I.Vasiliev ◽  
P. A. Smelov ◽  
N. V. Klimovskih ◽  
M. G. Shevashkevich ◽  
E. N. Donskaya
Keyword(s):  
Risk Management ◽  
Development Strategy ◽  
Commercial Bank ◽  
Operational Risk ◽  
Strong Impact ◽  
Credit Institution ◽  
Operational Risk Management ◽  
Operational Risks ◽  
Empirical Level ◽  
Analysis And Synthesis

The existing financial and economic situation in the world and in Russia impacts the activities of all sectors of the economy, including posing challenges for banks. In the conditions of prolonged instability, the banking community has to pay great attention to the risks taken and to manage them. Among all the risks that the bank is exposed to, operational risks represent a separate group due to its specifics, a lack of a systematic approach to analysis and a lack of identification criteria requiring more detailed study. The operational risk is unique in that, although it affects virtually all areas of the credit institution, it is difficult to establish and separate it from other bank risks. It should be noted that every year there appear all new types of operational risk that have a strong impact on the activities of the credit institution due to the development of information and computer systems, the complication of the instruments of the stock market and the improvement of business methods. Therefore, regulators of all countries try to constantly improve the regulatory framework related to the management of the operational risk of a commercial bank, based on the recommendations given by the Basel Committee on Banking Supervision.The article is aimed at developing an effective system for managing the operational risk of a commercial bank.The empirical level research methods used in this article are a description of what operational risk is, its types, tools and methods of assessment; comparison of operational risk management systems in the studied banks; generalization, analysis and synthesis of the information received; the hypothetical-deductive method is used at the theoretical level.Modernization and improvement of the operational risk management system helps stabilize the bank, increase stability and increase profitability, reduce the provision of capital for operational risk, and increase the attractiveness of banking services for consumers, thus benefiting a credit institution among competitors. In today's financial environment, the effective operational risk management is inherent in the long-term development strategy. 

Risk Management

2021 ◽  
pp. 206-225
Author(s):  
Eman A. Zabalawi ◽  
Abderazak Bakhouche ◽  
Randa El Chaar
Keyword(s):  
Risk Management ◽  
Organizational Culture ◽  
Business Processes ◽  
Financial Risks ◽  
Legal Compliance ◽  
Planning Stage ◽  
Operational Risks ◽  
External Events ◽  
High Level ◽  
Risk Managers

The chapter covers practical risk managers' points during the planning stage of entrepreneurship to integrate into decision making and core business processes. The chapter includes three risks and how to improve the integration of risk management into organizational culture grouped into three high-level objectives. First, strategic risks include the study of competitors, macroeconomics with its industry changes. Second, financial risks such as the business return of investment and forecasting, customer payments, loan interest charges, and liquidity. Access to finance featured prominently in several studies as a constraint on SME development. The third is the operational risks and internal analysis that includes legal compliance, breakdown of essential equipment, employee mismatch, partnership, information technology, external events, and supply chain reliability. It is vital to establish an organizational culture where risk management is a daily component activity.

RISK - MANAGEMENT OF INVESTMENT PROJECTS USING QUALIMETRIC ANALYSIS

ASJ. ◽  
2021 ◽  
Vol 1 (46) ◽  
pp. 64-67
Author(s):  
М. Tashbaev ◽  
B. Abdullaeva ◽  
А. Beisenov
Keyword(s):  
Risk Management ◽  
Financial Stability ◽  
Investment Project ◽  
Financial Risks ◽  
Investment Projects ◽  
Depth Analysis

This article discusses an in-depth analysis of the financial risks of investment projects based on the assessment of financial stability indicators, and the determination of the company's solvency class. This analysis allows you to determine whether an enterprise presenting an investment project on the market is capable of paying off its obligations and minimizing the investor's risks

scholarly journals A proposed operational risk management framework for small and medium enterprises

2017 ◽  
Vol 20 (1) ◽  
Author(s):  
Micheline J. Naude ◽  
Nigel Chiweshe
Keyword(s):  
Risk Management ◽  
Small And Medium Enterprises ◽  
Relevant Literature ◽  
Management Strategies ◽  
Operational Risk ◽  
Management Framework ◽  
Operational Risk Management ◽  
Operational Risks ◽  
Risk Management Framework ◽  
Medium Enterprises

Background: The gap between small and medium-sized enterprises (SMEs) and large businesses that perform risk assessment is significant. SMEs continuously face many operational risks and uncertainties in their daily operations, and these risks threaten to reduce productivity, increase costs and reduce profits.Aim: The purpose of this article was to develop an operational risk management framework that SMEs can use to identify and analyse risks in their operations and take corrective actions to mitigate these risks.Setting: Small and medium-sized enterprises in South Africa do not view risk management as a key component of organisational success, despite evidence that businesses that adopt risk management strategies are more likely to survive and grow.Methods: The article is exploratory in nature, and a conceptual analysis approach was used to formulate the framework. This study reviewed relevant literature sources on risk published between 2002 and 2017.Results: The four process steps of risk management were used as a reference point and form the foundation for the operational risk management framework. The categories of operational; marketing; technical and financial risks were identified from a review of available literature on risk management.Conclusion: There is a dearth of research that deals with operational risk management frameworks for SMEs. The expected contribution of this article, therefore, is twofold: firstly, it is envisaged that managers or owners of SMEs could use the proposed framework as a tool to appraise and minimise their operational risks; secondly, it will add to the current body of knowledge on risk appraisal for SMEs.

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