Assessment on the Banking Risk Management under COVID-19

Abstract

This essay explores how the banking industry in the UK has cooperated with the restoration of economic policies to stabilize the financial situation after the COVID-19 pandemic. It also analyzes how banks manage risks to prevent bankruptcy, specifically focusing on interest rate risk, credit risk, and market risk. The study uses the financial status and measures of the five major banks in the UK in 2020 and considers the impact of the pandemic, economic recession, and the Russian-Ukrainian war. The findings suggest that in order to deal with the coming risks, the banking industry needs to take several measures. In order to have a cushion to withstand possible losses, banks must first maintain appropriate core capital. Secondly, asset quality needs to be stable, which can be achieved through effective credit risk management. Thirdly, banks should focus on increasing interest rate income, as interest rates are likely to rise in the coming years. Finally, it is essential to actively manage risks, including market risks, to mitigate the potential impact of external events on the industry.