Abstract

Risk taking is an unavoidable feature of every banking system. Inability to identify these risks and provide effective risk management policies to mitigate them can pose serious threats to the banking system. This paper discusses interest rate, credit, liquidity, market, operational and political risks as the largest risks facing international banking system. The paper also outlines certain risk management measures provided by Base I, II and III. The paper concludes that continuous assessment of existing and potential risks as well as formulation and implementation appropriate risk management policies to mitigate should be major preoccupations of all banks.

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