Abstract

Commercial banks play a critical role as financial intermediaries and channel funds from savers to borrowers in an efficient manner. In doing so, banks are exposed to market, credit, liquidity, and operational risks. These risks should be proactively managed in a holistic manner with a focus on risk appetite and risk-adjusted returns. Members of banks’ upper management need an enterprise view of the risks so as to improve capital allocation decisions. During the last decade, with an objective of moving toward an enterprise risk-management model, banks have increased their investments in transforming their operating model.

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