Administration of Core Risks in banking part by Particular suggestion to Foreign swaps danger

Risk managing recently is one of the most important issues for banking professionals around the world, and it has begun to change the way banks operate. It is no longer is the sole responsibility of the Chief Executive Officer (CEO) or the risk department of a bank; its responsibility now resides with vice presidents, associates, directors and managing directors across various business units. Banks have felt the stress more than other financial institutions to improve their risk management practices to avoid of the credit crisis. The need for improve risk management is not only being driven by regulators, but by internal and external stakeholders: investors, board of directors and, in some cases, governments. Compliance aside, implementing effective risk policies that are calculated to continuously manage the danger of a bank and return profile as well as assets are required for the long-term winner of a bank

Risk is the probability to the actual return on an savings will differ from its expected return. Risk is the major constraint on investment; return on investment is the major opportunity or benefit. Other constraints on investments include taxes and the cost of investing. Large potential risks are associated with large potential returns. Small potential risks are associated with small potential returns. Investors will not assume risk for its own sake, nor will they incur a given level of risk without being reasonably compensated for doing so. Investors have risk-return trade-off which is usually seen in their investing activities.

Risk taking is an inherent element of banking sector and indeed, profits are in part dependent on successful risk taking in banking business. On the other hand, excessive and poorly managed risk can lead to losses and thus endanger the safety of the depositors of a bank. Thus risk in the banking sector refers to the possibility that the outcome of an action or event could create adverse impacts on the organization's capital, earnings or its viability. Sound risk management systems enables managers of the bank to take risks knowingly, reduce risks where appropriate and attempt to prepare for a future, which by its nature cannot be predicted with reasonable certainty.

Risk management is the process of measuring the actual dangers of a particular situation. Risk management is to optimize risk-reward trade-off rather than minimize/eliminate risk. Risk management activity has experienced exponential growth over the past decade. The term risk management of financial institutions represents all policies and procedures that financial institutions have implemented to manage, monitor as well as control their exposure to risk. In other words, risk management is the procedure of measuring or assessing the actual or potential dangers of a particular situation.

Risk management systems as well as practices will change, depending on the scope and size of the bank, the nature of its risk exposures and its risk tolerance or appetite. But whatever the particular approach, every bank should have integrated policies that, taken together, apply to significant activities of the bank regarding the corporate philosophy on risk management, permissible exposure of the bank to risk, objectives of risk management, delegation of authorities and responsibilities, and processes for identifying, monitoring and controlling/managing risk in respect of the portfolio nature of the bank.. The come near should be tailored to the particular nature of the bank. Risk management systems should enable the board of directors plus senior management to meet their or organization-wide responsibilities where comprehensiveness is a key attribute of effective risk management.

It is realized that risk management is essentially more important to be carried upon in the financial sector than any other part of the economy. It makes extra sense when it is known that the main reason of the financial institutions is to make the most of revenues and offer the maximum value to the shareholders by facilitating them with a variety of financial products and services especially by managing risks.
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