Robin Trehan says, proper risk management techniques should be implemented across different divisions of the banks.
Whenever you’re running a bank, you should take note of the risk management that comes your way. This will give you the needed leeway in handling any financial losses. This gives your bank a bracket of safety in order to prevent any major losses that can affect your bank’s performance. If you’re just starting out in banking, it is always wise to plan risk management measures you should consider for your banking service. These measures should include both not limited to Liquidity, Capital, Asset Quality, Management, Earnings, Sensitivity to Market Risk, Information Technology.
Another popular scheme some banks employ for their risk management is to transfer their risks through the use of Credit Default Swaps. This is a form of insurance where the creditor pays out if the borrower is defaulted. The underwriter agrees to assume the risk instead, freeing your bank from the heavy risks that can induce losses. The danger of this form of scheme is it can go the other way around. The risk may be too dangerous and in the end, both parties lose, making your bank investment worthless.
If you manage your risk properly, you can settle any issues that may lead to any financial instability. That is, reduce your risk factors found around your bank service. These risk management systems ensure the proper function of a bank, which makes it a challenge for the bank owner to regulate.
Using other risk management products can be beneficial for a bank. This will help you increase the risk management ratio, giving you a wide margin for safety, if things go rocky. Proper preventive measures should be administered into the banking system to help prevent any untoward incident in bank performance. Proper risk management techniques should also be implemented for Information Technology Audit, Management, Development and Acquisition, Support and Delivery, Telecommunications/Data Security, Electronic Funds Transfer Systems, Electronic Banking, and Safeguarding Customer Information.
Bank committees and risk management procedures should include detailed analysis of : Audit Engagement letter, Management Succession/Segregation of Duties, Information Technology Strategic Plan, Board Reporting, Emergency Procedures/Business continuity and Disaster recovery, Remote Deposit Capture, Review of monitoring reports and user profiles, Password controls, ACH/ Policy and Procedures, Multifactor Authentication, Electronic Banking Monitoring Procedures and Gramm Leach Bliley Act Compliance.
As a bank owner, you should consider what factors change the risk factor of your bank. This will help you shape better bank functions, which in the long run works to your favor. Banking is a lucrative business, and with the right risk management, you can turn the tables in your favor. This convenience puts your bank at a safe spot in the market, protecting itself from any market collapse or abrupt shift in the investment flow.
About Robin Trehan:
Robin Trehan is a Business Consultant and Blockchain at Credit Capital Funding in Chicago, Illinois. A graduate of Grenoble Ecole de Management, Trehan is an expert on a diverse set of banking topics including blockchain, e-payments, crypto and commercial banking
Contact: Robin Trehan
Company: Credit Capital Funding