module four Flashcards
Strategic risk
risk created by organisations business strategy
Operational risks
major risks stopping an organisation to do its strategic plan
Legal risks
regulator risk is the risk of changes to regulations including the potential for fines and penalties.
Reputational risk
a threat or danger to the good name or standing of an organisation.
Financial risk
arise where there is danger or possibility that the organisation and its shareholders will lose money
Credit risk
the risk that borrowers will not repay their loan. Interest rate risk arises from the impact of movements of interest rates
Liquidity risk
the risk a bank doesn’t have enough readily available funds to finance its day to day operations
Systemic risks
a further risk to the financial sector.
Holistic approach
An approach that recognises the affects between risks.
Governance and culture
strong risk culture is that everyone’s responsible with the governance setting everyones tone
Strategy and objective setting
work together in strategic planning process
Performance
risks are identified, assessed and responded to
Review and revision
reviewing means organisations can consider risk then can see what needs to be revised.
Information, communication and reporting
risk management requires sharing information across the organisation.
Credit risk
the risk borrowers wont repay their loan
Screening
important to have an understanding of the business
Monitoring and controlling
Important for bank to manage risks on all the loans
Credit risk management
monitoring and controlling performance of banks to control its risk exposure.
Measuring credit risk
Enables lender to calculate likelihood of borrower defaulting on a loan to ensure default rates are kept low