Risks in Banking and their management
Current turmoil in some US and European Banks has raised questions (in minds of general public) about various risks being faced by Banks, especially in the Indian context, and what measures Banks adopt for mitigation of such risks Risk in Banking According to Wikipedia, The Oxford English Dictionary (OED) 3 rd edition defines risk as: “(Exposure to) the possibility of loss, injury, or other adverse or unwelcome circumstance; a chance or situation involving such a possibility.” Risks are inherent in business of banking. A bank which does not take fair amount of risk cannot grow. Excessive risk may result in faster growth in the short term but at the same time could lead the Bank to a situation which may not be good for its stakeholders. As Banks primarily deal with money, perception of risk regarding Bank’s business or stability acquires added significance. Trust is the essential factor in business of banking and therefore it’s very important for Banks to see that the trus