Banks and Financial Institutions: Assessment of Risk Management Strategies

Abstract

Taking the banking sector as a perspective, this article comprehensively analyzes risk management from four perspectives: liquidity, credit, market, and systemic risk. This paper points out that banks need to closely monitor these risks and ensure their stability and continuity of operations during the epidemic through effective risk management measures. In terms of liquidity risk, banks need to ensure adequate liquidity reserves and maintain funding flexibility through the establishment of an effective management framework and regular stress tests. The key to controlling credit risk lies in rigorous credit review and assessment to ensure that loans are in line with sustainability and repayment capacity. It requires active risk hedging strategies to reduce the market volatility shock to the portfolio by countering market risk. Systemic risk is guarded against by complying with regulations, maintaining adequate capital buffers, and cooperating with regulators. The further research could delve into specific programs to combat these risks.