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The Main Theoretical Aspects Regarding Bank Risks: Models for their Management

Ana Maria Popescu ()

International Journal of Academic Research in Accounting, Finance and Management Sciences, 2018, vol. 8, issue 1, 153-160

Abstract: Banking activity involves a number of risks due to unforeseen events, possibly occurring. From this point of view the risks can not be avoided, because in the socio-economic evolution appear a series of elements, a series of aspects that are difficult to predict. Banking activity should be prudential, in the sense that, with increased attention, some elements that may lead to the emergence of risk can be identified in time. Risks can be random and uncontrollable, such as natural hazards that can hardly be identified. But there are management risks that can be identified, can be quantified, and measures can be taken in this context to ensure that they are diminished if not eliminated. Banking operations and procedures by an even specialized staff are ultimately an element that may also include germs of risk. Banking risks need to be managed, ie they need to be known and steps taken to minimize, at least probabilistically, their. Of course, for a bank it is necessary that its products lead to higher incomes than the expenses incurred. The bank benefit results from a volume of operations and a rate of benefit, but these can not be achieved each time. Banking should be subject to compliance with current banking regulations, but at the same time there may be a series of deviations that turn into risks that impact on banks' financial results. There are several risk categories depending on the exposure to risk, the characteristics of each bank, the duration or the coverage of these risk effects in the balance sheet. As a rule, banking risks, if propagated, lead to unwanted results, lead to a decrease in the ability to meet profitability indicators.

Keywords: Banking risk; management; financial-banking analysis; provision; banking product (search for similar items in EconPapers)
Date: 2018
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