Risk Management - Vcb
RISK MANAGEMENT
VIETCOMBANK
Table of Contents
1. Introduction ¬¬¬¬¬¬¬¬¬¬____________________________________________________ 4
Risk management & Vietcombank
2. Credit Risk _____________________________________________________ 6
3. Market Risk ____________________________________________________ 9
3.1. Liquidity Risk ___________________________________________ 9
3.2 Interest Rate Risk ________________________________________ 10
3.3. Foreign Exchange Rate Risk _______________________________ 11
3.4. Relationship between liquidity, interest rate and foreign exchange rate and the economy in Vietnam ___________ 12
4. Other issues
4.1 Operational Risk ________________________________________ 13
4.2 Political Risk ___________________________________________ 13
4.3 Environmental Risk ______________________________________ 13
5. Conclusion ____________________________________________________ 14
6. References ____________________________________________________ 15
1. INTRODUCTION
1.1. Introduction to risk management
R.S. Raghavan consider risk as what “associated with uncertainty and reflected by way of charge on the fundamental/basic i.e. in the case of business it is the Capital, which is the cushion that protect liability holders of an institution.”
The term “risk” in this essay refers to financial risk in banking business. Risk is the potentially that both the expected and unexpected events may have an adverse impact on the bank’s capital or earnings. Risk is the greatest where the probability of occurrence or non-occurrence is equal. It can be said that the nature of a commercial bank’s activities today is risk acceptance and risk management. Moreover, banks are always forced to face with risk at any economic stage. Specially, risk has a huge effect on not only banks themselves but also the economy. Unfortunately, risk is an inherent objective factor which cannot be
VIETCOMBANK
Table of Contents
1. Introduction ¬¬¬¬¬¬¬¬¬¬____________________________________________________ 4
Risk management & Vietcombank
2. Credit Risk _____________________________________________________ 6
3. Market Risk ____________________________________________________ 9
3.1. Liquidity Risk ___________________________________________ 9
3.2 Interest Rate Risk ________________________________________ 10
3.3. Foreign Exchange Rate Risk _______________________________ 11
3.4. Relationship between liquidity, interest rate and foreign exchange rate and the economy in Vietnam ___________ 12
4. Other issues
4.1 Operational Risk ________________________________________ 13
4.2 Political Risk ___________________________________________ 13
4.3 Environmental Risk ______________________________________ 13
5. Conclusion ____________________________________________________ 14
6. References ____________________________________________________ 15
1. INTRODUCTION
1.1. Introduction to risk management
R.S. Raghavan consider risk as what “associated with uncertainty and reflected by way of charge on the fundamental/basic i.e. in the case of business it is the Capital, which is the cushion that protect liability holders of an institution.”
The term “risk” in this essay refers to financial risk in banking business. Risk is the potentially that both the expected and unexpected events may have an adverse impact on the bank’s capital or earnings. Risk is the greatest where the probability of occurrence or non-occurrence is equal. It can be said that the nature of a commercial bank’s activities today is risk acceptance and risk management. Moreover, banks are always forced to face with risk at any economic stage. Specially, risk has a huge effect on not only banks themselves but also the economy. Unfortunately, risk is an inherent objective factor which cannot be