RISK AND BASIC RISK MANAGEMENT
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 65 rapid-fire Q&A cards.
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.
How does the RBI define credit risk for Indian banks?
Credit risk is the potential that a borrower or counterparty will fail to meet its obligations in accordance with agreed terms, leading to financial loss for the bank.
What is the meaning of risk quantification in bank risk management?
Assigning numerical values to the probability and impact of risks.
What is market risk in banking?
Market risk is the risk of losses in on- and off-balance sheet positions arising from movements in market prices, including interest rates, foreign exchange rates, equity prices, and commodity prices.
What is enterprise-wide risk management (ERM) in banks?
Holistic approach managing all risks across the entire bank organization.
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