By nature, the banking industry is a risk management business, specifically taking a risk in lending funds, investing in bonds, or utilizing customer deposits, shareholder capital, or market borrowings. The risk management process becomes more complicated based on numerous factors such as the complexity of the institution or the volume, velocity, and value of transactions.
No doubt, risk management techniques have been discussed, identified, and utilized for centuries, going back to initial barter techniques before the Roman Empire. Assigning a value, accepting something in return, and then trading for another item a person might need involved risk.
Over time, the financial system has evolved, and while many of the same risks remain, there are new issues and concerns. In turn, the financial services industry adapts and adjusts its risk management governance and controls.
Length: 3 pages (PDF 82 kB)