any dynamic management of the credit institution should seek to ensure that the value of the bank was close to the maximum, ie,the bank makes a profit at a certain level of risk.In turn, the banking risk management is a complex process, which includes cash management, continuous monitoring of the potential for exposure and prevention through effective organization of work, the selection of qualified personnel in the rank and file and leadership positions, implementation of automated processes.
Bank risks are divided into several main groups:
1. Financial risks, which include market and currency risk, liquidity risk, interest rate and credit risk capital, the balance sheet structure risks, the financial statements.
2. Business risks, including risks of the financial infrastructure, legal, market.
3. The risks of emergencies, among which are the political risks of the banking crisis in the country of the bank, as well as abroad.
4. Operational risks, including fraud staff or customers, risks of technological failure, the chosen strategy and the internal system of a credit institution.
most difficult to manage the risks are considered to be emergencies, becauseoften they arise spontaneously and can not be foreseen, especially if some assets of the bank located in another country.For example, a ban on operations with deposits in another country nullifies the management of cash flows, which were to go to a particular bank.Others risks can be minimized, and to succeed.
Due to the fact that the basic operations of the bank are such as the accumulation of funds and provision them in the form of loans, the significant share in the bank takes the credit risk.It involves the likelihood that the borrower does not pay back the loan in full, it will return only part of the operation or conduct in violation of the terms of repayment.
include credit risks from the release of bad faith of individuals, defaults by corporate customers, as well as the risk that a State would lose the ability to pay for its liabilities (sovereign).
Credit risk management involves:
- the bank's loan portfolio management, the principles of which are reflected in the relevant policies of the plan placement of credit resources, etc .;
- performance of the credit function (credits to be returned, make a profit and to be in demand in the market);
- constant monitoring of the quality of the loan portfolio;
- the allocation of non-performing loans, and measures for their return;
- a reduction of credit risk by minimizing excessively large loans to any person, region or even the country, to create a system backup for credit losses and other.
addition to repayment of loans, the bank must raise funds for deposits, asat their own expense made only a small proportion of lending.To efficiently produce cash flow management, it is necessary to analyze the general economic trends and competitors' offers to set deposit rates, attractive for customers to have a good reputation to borrow money on the interbank market, meet the requirements of the regulatory authorities to issue its own securities, profitable to invest the cash receivedmeans, for example, in the stock or currency market, etc..
Cash Management Bank is a complex process, the end result of which should be an optimal balance sheet structure, providing a profit at the desired level of risk and compliance with existing regulations and laws.
