Managing Risks in Commercial and Retail Banking

Informationen zum Autor AMALENDU GHOSH worked for the Reserve Bank of India (RBI) for thirty-six years and has extensive exposure to bank regulation, risk management, risk-based bank supervision, and the New Basel Capital Accord. He was the chief of RBI's banking regulation department. After retirement, he worked with RBI on a contractual basis as the head of a risk-based bank supervision project implementation group, and was involved in drawing the road map, developing a supervision model, and writing a bank examination manual for actual conduct of bank inspection for the switch to the risk-based bank supervision system. Ghosh was also the risk management consultant to two nationalized commercial banks in India. He has hands-on experience in the formulation and implementation of risk management practices and procedures including development of models for counterparty rating. Klappentext A practical guide to the practices and procedures of effectively managing banking risksManaging Risks in Commercial and Retail Banking takes an in-depth, logical look at dealing with all aspects of risk management within the banking sector. It presents complex processes in a simplified way by providing real-life situations and examples.The book examines all dimensions of the risks that banks face--both the financial risks--credit, market, and operational--and the non-financial risks--money laundering, information technology, business strategy, legal, and reputational. Focusing on methods and models for identifying, measuring, monitoring, and controlling risks, it provides practical advice backed up by solid theories, without resorting to the use of complicated mathematical and statistical formulas.Author Amalendu Ghosh exposes topics that are usually absent in books on managing banking risk--such as design of control framework, risk management architecture, credit risk rating, risk-based loan pricing, portfolio analysis, business continuity planning, and corporate governance.* Author has extensive experience with a variety of major banks and institutions worldwide and brings a fresh perspective in the wake of the global finance crisis* Presents a novel approach using models of the credit risk rating of different types of borrowers, the methodology for assigning weights for deriving the rating, and the scoring process* Covers the essentials of corporate governance and options for credit risk assessment in line with the recommendations made in the New Basel Capital Accord* Explains the methodology of risk-based internal audit, including techniques to enable bank branches to switch over from the old transaction-based audit methodsWith its logical sequence of the aspects of risk management, the book's layout is ideal for presentations, making it a handy tool for risk management training Zusammenfassung A practical guide to the practices and procedures of effectively managing banking risks Managing Risks in Commercial and Retail Banking takes an in-depth, logical look at dealing with all aspects of risk management within the banking sector. Inhaltsverzeichnis Preface xv Part One Risk Management Approaches and Systems Chapter 1 Business Risk in Banking 3 1.1 Concept of Risk 3 1.2 Broad Categories of Risks 3 1.3 Credit Risk 5 1.4 Market Risk 7 1.5 Operational Risk 8 1.6 Operating Environment Risk 10 1.7 Reputation Risk 11 1.8 Legal Risk 12 1.9 Money Laundering Risk 12 1.10 Offshore Banking Risk 14 1.11 Impact of Risk 15 1.12 Summary 16 Notes 18 Chapter 2 Control Risk in Banking 19 2.1 How Control Risk Arises 19 2.2 External Control and Internal Control Risks 19 2.3 Internal Control Objectives 21 2.4 Internal Control Framework 21 2.5 Tasks in Establishing a Control Framework 28 2.6 Business Risk and Control Risk Rel...

List of contents

Preface xv
 
PART ONE Risk Management Approaches and Systems
 
CHAPTER 1 Business Risk in Banking 3
 
1.1 Concept of Risk 3
 
1.2 Broad Categories of Risks 3
 
1.3 Credit Risk 5
 
1.4 Market Risk 7
 
1.5 Operational Risk 8
 
1.6 Operating Environment Risk 10
 
1.7 Reputation Risk 11
 
1.8 Legal Risk 12
 
1.9 Money Laundering Risk 12
 
1.10 Offshore Banking Risk 14
 
1.11 Impact of Risk 15
 
1.12 Summary 16
 
Notes 18
 
CHAPTER 2 Control Risk in Banking 19
 
2.1 How Control Risk Arises 19
 
2.2 External Control and Internal Control Risks 19
 
2.3 Internal Control Objectives 21
 
2.4 Internal Control Framework 21
 
2.5 Tasks in Establishing a Control Framework 28
 
2.6 Business Risk and Control Risk Relationship 34
 
2.7 Summary 35
 
CHAPTER 3 Technology Risk in Banking 37
 
3.1 What Is Technology Risk? 37
 
3.2 Risks in Electronic Banking 37
 
3.3 Sources of Technology Risk 38
 
3.4 Management of Technology Risk 42
 
3.5 Summary 43
 
CHAPTER 4 Fundamentals of Risk Management 45
 
4.1 Risk Management Concept 45
 
4.2 Risk Management Approach 45
 
4.3 Risk Identification Approach 47
 
4.4 Risk Management Architecture 47
 
4.5 Risk Management Organizational Structure 48
 
4.6 Summary 53
 
CHAPTER 5 Risk Management Systems and Processes 55
 
5.1 Risk Management Policy 55
 
5.2 Risk Appetite 56
 
5.3 Risk Limits 57
 
5.4 Risk Management Systems 59
 
5.5 Management Information System 67
 
5.6 Verification of Risk Assessment 72
 
5.7 Human Resource Development 72
 
5.8 Top Management Commitment 73
 
5.9 Capital Adequacy Assessment and Disclosure Requirement 74
 
5.10 Risk Prioritization 75
 
5.11 Summary 76
 
Notes 77
 
PART TWO Credit Risk Management
 
CHAPTER 6 Credit Problems and Credit Risk 81
 
6.1 Genesis of Credit Problems 81
 
6.2 Causes of Credit Risk 92
 
6.3 Summary 93
 
Notes 94
 
CHAPTER 7 Identification of Credit Risk 95
 
7.1 Market Risk and Credit Risk Relationship 95
 
7.2 Credit Risk Identification Approach 96
 
7.3 Credit Risk Identification Process 100
 
7.4 Summary 109
 
Notes 110
 
CHAPTER 8 Credit Risk Rating Concept and Uses 111
 
8.1 Credit Risk Rating Concept 111
 
8.2 Credit Risk Rating Uses 113
 
8.3 Credit Risk Rating Principles 122
 
8.4 Summary 127
 
Notes 128
 
CHAPTER 9 Credit Risk Rating Issues 129
 
9.1 Rating Practices in Banks 129
 
9.2 Design of the Rating Framework 130
 
9.3 Conceptual Issues 131
 
9.4 Developmental Issues 136
 
9.5 Implementation Issues 140
 
9.6 Rating Framework Overview 147
 
9.7 Summary 147
 
Notes 151
 
CHAPTER 10 Credit Risk Rating Models 153
 
10.1 Internal Rating Systems in Banks 153
 
10.2 Need for Different Rating Models 154
 
10.3 Need for New and Old Borrower Rating Models 155
 
10.4 Types of Rating Models 157
 
10.5 New Capital Accord Options 158
 
10.6 Asset Categorization 159
 
10.7 Identification of Model Inputs 160
 
10.8 Assessment of Component Risk 161
 
10.9 Summary 172
 
Notes 172
 
CHAPTER 11 Credit Risk Rating Methodology 173
 
11.1 Rating Methodology Development Process 173
 
11.2 Deri

Product details

• Authors: A Ghosh, Amalendu Ghosh, Ghosh Amalendu
• Publisher: Wiley, John and Sons Ltd
• Languages: English
• Product format: Hardback
• Released: 27.03.2012
• EAN: 9781118103531
• ISBN: 978-1-118-10353-1
• No. of pages: 480
• Series: Wiley Finance Editions; The Wiley Finance Series; Wiley Finance; Wiley Finance Editions; The Wiley Finance Series
• Subjects: Guides > Law, job, finance; Social sciences, law, business > Business > Business administration; Finance & Investments, Finanz- u. Anlagewesen, Institutionelle Finanzplanung, Institutional & Corporate Finance, Geld u. Bankwesen, Money & Banking