Abstract
Risk management is an area that is experiencing rapid growth and it entails many and various perspectives and views of factors that are involved, how they are conducted and their uses. As a consequence of global financial crisis, regulators and financial industry leaders agree on the need for a comprehensive risk management reform in the financial field. Even though solutions may differ, most agree that the lack of an appropriate risk management system was one of the key factors in causing the financial crisis. This paper provides a literature review on sound risk management governance for banks and other financial institutions.
Highlights
Banks and financial institutions assume risks during the course of conducting business for the purpose of realizing returns on investments
This is where the need for effective risk management frameworks in banks and financial institutions is crucial to their survival
Not many industries have experienced the effect of risk management more profoundly than the financial services industry
Summary
Banks and financial institutions assume risks during the course of conducting business for the purpose of realizing returns on investments. It is obvious that these risks can potentially eliminate expected returns and entail losses for these institutions. Banks and institutions typically have reserves for expected losses but unpredictable events such as economic crisis or falling interest rates cause institutions to rely on their capital to alleviate related losses. This is where the need for effective risk management frameworks in banks and financial institutions is crucial to their survival. By utilizing efficient risk management systems, these institutions will become competent in optimizing their risk return trade off. Http://www.granthaalayah.com ©International Journal of Research - GRANTHAALAYAH [74-81]
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