8/8/2019 Risk Management in Banking Salman Icici

http://slidepdf.com/reader/full/risk-management-in-banking-salman-icici 1/19

1

8/8/2019 Risk Management in Banking Salman Icici

http://slidepdf.com/reader/full/risk-management-in-banking-salman-icici 2/19

BASEL-II

What is risk.?

Risk management.Capital management.

Who uses risk management.

Risk management in banking.

Components & Types of risk.

2

8/8/2019 Risk Management in Banking Salman Icici

http://slidepdf.com/reader/full/risk-management-in-banking-salman-icici 3/19

´Basel II is the second of the Basel

 Accords, which are recommendations on

banking laws and regulations issued bythe Basel Committee on Banking

Supervision.µ

3

8/8/2019 Risk Management in Banking Salman Icici

http://slidepdf.com/reader/full/risk-management-in-banking-salman-icici 4/19

´ A possibility of something unpleasanthappening or the chance of encountering

loss or harm.µ

4

8/8/2019 Risk Management in Banking Salman Icici

http://slidepdf.com/reader/full/risk-management-in-banking-salman-icici 5/19

Good management practice

Process steps that enable improvement in decisionmaking

 A logical and systematic approach

Identifying opportunities

 Avoiding or minimizing losses

5

8/8/2019 Risk Management in Banking Salman Icici

http://slidepdf.com/reader/full/risk-management-in-banking-salman-icici 6/19

´Preparing for all situations that may

occurµ

6

8/8/2019 Risk Management in Banking Salman Icici

http://slidepdf.com/reader/full/risk-management-in-banking-salman-icici 7/19

Liabilities Assets

Capital Cash and Balances at RBI

Reserves and S rplus

Deposits

Borrowings Invest entsOther  Liabilities and  rovisions Advances

Contingent Liabilities Fixed  Assets

Other   Assets

Balance with banks and  oney 

at call and shor t notice

Balance Sheet of a Bank

CAPIT AL M ANAGEMENT IN B ANKING

8/8/2019 Risk Management in Banking Salman Icici

http://slidepdf.com/reader/full/risk-management-in-banking-salman-icici 8/19

Risk Management practices are

widely used in public and the

private sectors, covering a wide

range of activities or 

operations.

These i lude:

Finance and

Investment

Insurance

Health Care

Public

Institutions

Governments

Finance and

Investment

Insurance

Health Care

Public

Institutions

Governments

8

8/8/2019 Risk Management in Banking Salman Icici

http://slidepdf.com/reader/full/risk-management-in-banking-salman-icici 9/19

UNCERTAINITY 

EXPOSU

RE

9

8/8/2019 Risk Management in Banking Salman Icici

http://slidepdf.com/reader/full/risk-management-in-banking-salman-icici 10/19

Operational.

Credit.

Reputational.

0

8/8/2019 Risk Management in Banking Salman Icici

http://slidepdf.com/reader/full/risk-management-in-banking-salman-icici 11/19

OPERATIONAL RISK-The risk of loss resulting frominadequate or failed internal processes, peopleand systems, or from external events.

CREDIT RISK-Risk due to an uncertainty in acounterparty¶s ability to meet its obligations inaccordance with agreed upon terms.

REPUTATIONAL RISK- Reputational risk is the

 potential that negative publicity, whether true or not, will result in loss of customers, severing of corporate affiliations, decrease in revenues and increase in costs

8/8/2019 Risk Management in Banking Salman Icici

http://slidepdf.com/reader/full/risk-management-in-banking-salman-icici 12/19

Internal Fraud.External Fraud.Employment Practices and Workplace

Safety.Clients, Products and Business Practices.Damage to Physical Assets.Business Disruption and System Failures.Execution, Delivery and Process

Management.

2

8/8/2019 Risk Management in Banking Salman Icici

http://slidepdf.com/reader/full/risk-management-in-banking-salman-icici 13/19

Unauthorized Activity. Transactions not reported. Transaction type unauthorized

.Theft and Fraud.

Fraud/credit fraud/worthless deposits. Theft/extortion/embezzlement/robbery.

3

8/8/2019 Risk Management in Banking Salman Icici

http://slidepdf.com/reader/full/risk-management-in-banking-salman-icici 14/19

Theft and Fraud.

Theft/robbery.

Forgery.

Check kiting.

Identity theft.

Elder financial abuse.

Systems Security. Hacking damage.

Theft of information (with monetary loss).

4

8/8/2019 Risk Management in Banking Salman Icici

http://slidepdf.com/reader/full/risk-management-in-banking-salman-icici 15/19

Loans. Acceptances. Interbank transactions.

Trade financing.FX transactions.Equities.Letters of credit.

Options.

5

8/8/2019 Risk Management in Banking Salman Icici

http://slidepdf.com/reader/full/risk-management-in-banking-salman-icici 16/19

The key to managing reputational 

risk is sound risk management ,

coupled with straightforward communication about the problem 

the bank is facing.

16

8/8/2019 Risk Management in Banking Salman Icici

http://slidepdf.com/reader/full/risk-management-in-banking-salman-icici 17/19

 Re-establishing a firm·s  reputation takes a long time.

17

8/8/2019 Risk Management in Banking Salman Icici

http://slidepdf.com/reader/full/risk-management-in-banking-salman-icici 18/19

 A positive corporate culture.

 Actively observed policies and

procedures.Effective use of technology.

Independence of risk management

professionals.

18

8/8/2019 Risk Management in Banking Salman Icici

http://slidepdf.com/reader/full/risk-management-in-banking-salman-icici 19/19

PRESEN

TED BY:-SALMA N KHA N

MBA 2009-11 BATCH

GIMR

19