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Banking Industry Solutions

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Business Challenges

Risk Control Management requires a sound understanding of the bank’s operational environment, the risks to which it is exposed to and the techniques available to measure and manage these. Risk control management is also affected by the infrastructure put in place to implement the chosen risk management framework. There are many different elements to this infrastructure, including organization, management, procedures and controls, all of which have an impact on the effectiveness of the implemented framework. One of the key factors is the effectiveness of the risk control management system, whether an integrated treasury and risk management systems or a specialist risk engine.

Some of the key decisions and policies that needs to be formalized for the risk control management purposes includes

  • To what extent the losses needs to be avoided and to what extend is risk of loss a necessary part of the banking activity.
  • Formalization of standard procedures for measuring risks and risk exposures
  • The extent of decentralization for underwriting the loans and the incentives structure to align individual goals with the banks overall goals
  • Capital allocation across various types exposures and whether there is excessive exposure towards particular risk
  • Calculation of consolidated risk for asset types and allocation of appropriate capital
  • Various risk mitigation techniques to reduce the risk.