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RISK AND BASIC RISK MANAGEMENT
What is risk in the context of banking and financial management?
Risk is the possibility of an adverse outcome or loss arising from uncertainty in future events, impacting a bank's earnings, capital, or ability to meet its obligations.
What is the difference between pure risk and speculative risk in banking?
Pure risk involves only loss; speculative risk involves gain or loss.
What are the three broad categories of risk faced by banks?
Banks face credit risk, market risk, and operational risk as the three broad Basel-recognized categories, along with liquidity risk, legal risk, and reputational risk.
What is inherent risk in banking operations?
Risk existing before controls or mitigation measures are applied.
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