Steps to Implement Risk Management in Banks Financial Essay
Why risk management is important. 1. Protects the organization's reputation. In many cases, effective risk management proactively protects your organization against incidents that could damage its reputation. “Franchise risk is a concern for all companies,” says Simons in Strategy Execution. “However, it is above all urgent. Risk management is part of the process of project assessment, implementation and management. In essence, risk management involves identifying the risks associated with a project, analyzing the risks, planning the implementation of a project and managing the risks associated with it. Risk management involves a proactive approach that, Deciding on the risk management approach: implementing more flexible governance processes and approaches to risk mitigation and controls. To enhance these capabilities, ERM must take four steps: Define its own vision and mandate for creating value for the bank. Shift the way of working in core areas, with a flexible approach. Eight steps for establishing a risk management program are: Implement a risk management framework based on the risk policy. When developing the company's risk management framework, attention should be paid to the services offered, marketing and communications, human resources and personnel issues, information and resources. This article attempts to highlight the importance of risk assessment and management in banks, focusing on the recommendations of the Basel II Accord. Since this global financial crisis was primarily caused by the risks associated with lending, this paper will narrow down and focus more on,