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Risk and Risk Management in Banks

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Summary

It touches on various risks that affect banks andRISK AND RISK MANAGEMENT IN BANKS
The increasing demand for risk management on the part of organizations, businesses
and government authorities has been identified as a general societal trend emphasizing
public accountability and responsibility.
A bank has many risks that must be managed carefully, because it uses a large amount
of leverage. Without effective management of its risks, it could very easily become
insolvent. If a bank is perceived to be in a financially weak position, depositors will
withdraw their funds, other banks won't lend to it nor will the bank be able to sell debt
securities in the financial markets, which will exacerbate the bank's financial condition
even more. The fear of bank failure was one of the major causes of the 2007 – 2009
credit crises and of other financial panics in the past. Although banks share many of the
same risks as other businesses, the major risks that especially affect banks are liquidity
risk, interest rate risks, credit default risks, and trading risks. The r isks also face some
major challenges.how those risk can be managed in banks.
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