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Banking. Financial risks (lecture notes)

Lecture notes, cheat sheets

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Financial risks

Risk is a cost expression of a probabilistic event leading to losses. The higher the chance of making a profit, the higher the risk. Risks are formed from deviations of actual data from the assessment of the current state and future development. Thus, it is possible to make a profit only if the opportunities for incurring losses (risks) are foreseen (weighted) in advance and secured. Therefore, the problems of risks in the activities of commercial banks should be given considerable attention. The main ones include: the development of a classification of banking risks, the basis for assessing and methods for calculating the economic and political and other risks of a bank, an individual borrower, a group of enterprises, an industry, a republic, a country.

The most important elements underlying the classification of banking risks are: 1. type or type of commercial bank; 2. sphere of influence or occurrence of banking risk; 3. composition of the bank's clients; 4. risk calculation method; 5. degree of banking risk; 6. distribution of risk over time; 7. nature of risk accounting; 8. the ability to manage banking risks; 9. bank risk management tools.

The main task of the scientific management of bank risk operations is to determine the degree of admissibility and justification of a particular risk and make an immediate practical decision aimed either at using risk situations or developing a system of measures that reduce the possibility of bank losses from conducting a particular operation.

Author: Shevchuk D.A.

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