Risk and basic risk management framework
Chapter notes, video classes, MCQ practice tests and quick-revision one-liners for Bank Financial Management — CAIIB.
One-liners from this chapter
Free sample — 8 of 66 rapid-fire Q&A cards.
What is the primary definition of risk in the context of international banking?
Risk is the probability of an adverse outcome or loss arising from uncertainty in financial transactions, market movements, or counterparty behavior.
What is residual risk in the context of bank risk management?
Risk remaining after controls and mitigants have been applied.
What are the three broad categories of risk faced by banks in international operations?
The three broad categories are credit risk, market risk, and operational risk, collectively forming the foundation of Basel II and Basel III risk frameworks.
What is inherent risk in banking operations?
Risk existing before any controls or mitigants are applied.
What is country risk in international banking?
Country risk is the risk of loss arising from a borrower's inability or unwillingness to repay due to political, economic, or social conditions in their home country, including sovereign default and transfer restrictions.
What is enterprise risk management (ERM) in the context of banks?
Holistic framework managing all risks across the entire bank.
What distinguishes transfer risk from sovereign risk?
Transfer risk arises when a government restricts conversion or transfer of foreign exchange even if the borrower is willing to repay, whereas sovereign risk is the risk of a government itself defaulting on its obligations.
What is the meaning of risk mitigation in banking?
Actions taken to reduce the probability or impact of a risk.
Video classes for this chapter
Risk and basic risk management framework Part 1
Risk and basic risk management framework Part 2
Risk and basic risk management framework Part 1
Risk and basic risk management framework Part 2
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