RMFI

Key Risk Indicators (KRIs) are like the warning lights on a car dashboard. They do not tell you the engine has already blown up. They tell you that something is heating up before it becomes a crisis. In banking, KRIs…

Risk management would be impossible if every identified risk were treated with equal urgency. Some risks happen every week. Others might happen once in a decade. Risk Likelihood is the tool that helps banks separate the urgent from the theoretical…

Non-financial risks may not show up directly in a bank’s trading book or loan portfolio. But when they hit, they can be just as damaging as any credit or market loss. In some cases, they are more dangerous because they…

Financial risks are the most direct threats to a bank’s profitability and capital. There are four main types. A. Liquidity Risk Liquidity risk arises because banks fund long-term assets with short-term liabilities. If depositors suddenly demand their money back or…

Risk in banking comes in many shapes and sizes. Categorizing it properly helps banks to decide which risks to avoid, which to transfer, and which to manage actively. There are two broad ways to look at banking risks. From a…

Risk is the possibility of incurring financial loss or deviation from expected results. Return is the profit, income, or gain earned from an investment over a certain period. There exists a positive relationship between risks and returns. High Risk, High…