Identifying Risks in the International Banking System

Abstract

The impact of globalisation on banks has created opportunities for its expansion, which are important for the survival, growth and success of this industry (Spyropoulou, Skarmeas and Katsikeas, 2011). While there is much to be gained through global expansion of banks, however, a natural byproduct of this strategy is increased risk, which can affect the internal and external environment of bank and enhance banking probability of failure. In addition, risks are inter-dependent and events affecting one area of risk can have ramifications and penetrations for a range of other categories of risks and can cause a domino effect.Therefore, it is important to understand the risk faced by the international banks, as this understanding can be used to manage and control the risks. Managing risks can limit the probability of bank failure, while, effectively controlling the risk can minimise the domino impact.The focus of this paper is to analyse risks faced by the international banks based on its internal and external environment and the risks that can be classified as interrelated, utilising this analysis provides an understanding to manage and control risks to minimise failures.