The nature of a balanced and embedded risk culture

Your company's operating style reflects its attitude toward risk. Much information about the bank's credit risk can be found in its published financial reports. Loans constitute about 80% of a bank balance sheet, so a lot of risk resides there. You can also observe levels of nonperforming...

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Bibliographic Details
Published in:The RMA Journal 2013-07, Vol.95 (10), p.22
Main Author: Rose, M. Robert
Format: Article
Language:English
Subjects:
Audits
Bank loans
Corporate culture
Credit risk
Enterprise risk management
Guidelines
Loan review
Mortgage companies
Nonperforming loans
Petroleum industry
Risk management
Success
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Summary:Your company's operating style reflects its attitude toward risk. Much information about the bank's credit risk can be found in its published financial reports. Loans constitute about 80% of a bank balance sheet, so a lot of risk resides there. You can also observe levels of nonperforming loans and assets and, with today's enhanced financial disclosures, levels of criticized and classified assets. Besides credit risk, banks also take on: 1. strategic risk, 2. product risk, 3. operational risk, and 4. regulatory risk. These more subtle forms of risk taking occur in areas where risk awareness may be low. A robust enterprise risk management program begins with a risk appetite statement that offers a pragmatic view of risk tolerance. The risk appetite statement has two parts. The first is a preamble with high-level guiding principles. The second part uses qualitative and quantitative metrics to express and measure the risk appetite.
ISSN:1531-0558