Assaignment
Risk Management in Financial Institutions with special reference to Bangladesh
Prepared for: |
Professor Dr. Shah Md. Ahsan Habib
Financial Market and Institution
East West University
Prepared By: |
Tamanna Mucsid
2010-2-90-007
East West University
Executive Summary
Increase of global markets, technological advancements, innovative new financial products and changing regulatory environments has made risk management a critical task for financial institutions today as they simultaneously mitigate and create risks. It has, therefore, become increasingly important to identify measure, monitor and manage a financial institutions’ exposure to product-market and capital-market risks. In capital-market a firm transacts with owners and lenders and is exposed to interest rate, liquidity, currency, settlement and basis risks. In the product market it transacts with clients and suppliers. This may result in credit, strategic, regulatory, operating, commodity, human resources, and legal and product risks. Essentially, risk management occurs anytime an investor or fund manager analyzes and attempts to quantify the potential for losses in an investment and then takes the appropriate action (or inaction) given their investment objectives and risk tolerance. Inadequate risk management can result in severe consequences for companies as well as individuals. In the past two decades, the banking industry has evolved from a financial intermediation between depositors and borrowers, to a “one-stop” centre for a range of financial services like insurance, investments and mutual funds. The advancement of information and communicative technology (ICT) is given credit for the evolution of banking services, in particular, online banking. The development in ICT has not only provided vast banking opportunities previously beyond reach, but also
Prepared for: |
Professor Dr. Shah Md. Ahsan Habib
Financial Market and Institution
East West University
Prepared By: |
Tamanna Mucsid
2010-2-90-007
East West University
Executive Summary
Increase of global markets, technological advancements, innovative new financial products and changing regulatory environments has made risk management a critical task for financial institutions today as they simultaneously mitigate and create risks. It has, therefore, become increasingly important to identify measure, monitor and manage a financial institutions’ exposure to product-market and capital-market risks. In capital-market a firm transacts with owners and lenders and is exposed to interest rate, liquidity, currency, settlement and basis risks. In the product market it transacts with clients and suppliers. This may result in credit, strategic, regulatory, operating, commodity, human resources, and legal and product risks. Essentially, risk management occurs anytime an investor or fund manager analyzes and attempts to quantify the potential for losses in an investment and then takes the appropriate action (or inaction) given their investment objectives and risk tolerance. Inadequate risk management can result in severe consequences for companies as well as individuals. In the past two decades, the banking industry has evolved from a financial intermediation between depositors and borrowers, to a “one-stop” centre for a range of financial services like insurance, investments and mutual funds. The advancement of information and communicative technology (ICT) is given credit for the evolution of banking services, in particular, online banking. The development in ICT has not only provided vast banking opportunities previously beyond reach, but also
References: | * Bank Management & Financial Services(7th editions) -Peter S. Rose and Sylvia Hudgins * Risk Based Capital Adequacy Guideline by Bangladesh Bank * Core Risk Management Guideline by Bangladesh Bank * Risk Management of Shahjalal Islami Bank Ltd