RMFI

Operational risk is the risk of loss resulting from inadequate or failed internal processes, people, and systems or from external events. According to Bangladesh Bank guidelines, it is the risk of unexpected losses due to physical catastrophe, technical failure, and…

What is Risk? Risk refers to uncertainties that lead to adverse outcomes. These outcomes deviate from planned objectives or expectations. Financial risk is the uncertainty that results in adverse variation of profitability or outright losses. Profits depend on cash inflows…

When interest rates change, the market value of a bank’s assets and liabilities changes too — but not always by the same amount. Duration Gap Analysis helps measure this difference and understand the risk it creates for the bank’s net…

Bangladesh Bank guidelines require banks to conduct stress tests on five specific risk areas, plus a combined shock assessment that aggregates all of them together. Credit Risk: Five shocking events are tested: (i) Direct increase in NPLs: 3%, 9%, and…

Stress testing is a simulation technique used to determine the reactions of different financial institutions under a set of exceptional, but plausible assumptions, through a series of tests. At the institutional level, stress testing provides a way to quantify the…

Implementing ERM is not something you do once and forget. It is an ongoing process. The 10 steps are grouped into 4 phases. Each phase builds on the previous one. Phase 1: Planning and Designing Step 1 — Identify Intended…