Catalog of risksMarket RiskCredit riskOperational RiskLiquidity RiskModel RiskCompliance RiskConduct RiskReputational RiskESG RiskEnterprise risk managementEstablish risk appetiteIdentify riskRisk assessmentResponse to riskRisk Management Approaches
Catalog of risks
Market Risk
Credit risk
Credit risk is the probability of a financial loss resulting from a borrower's failure to repay a loan. Essentially, credit risk refers to the risk that a lender may not receive the owed principal and interest, which results in an interruption of cash flows and increased costs for collection.
Operational Risk
Liquidity Risk
Liquidity risk is the risk of an institution's financial safety and soundness being threatened by its inability to meet its contractual obligations. It can arise when an institution is unable to meet payment obligations in full and on time, or only be able to do so at excessive costs
Model Risk
Compliance Risk
Conduct Risk
Reputational Risk
ESG Risk
Enterprise risk management
Enterprise risk management (ERM) is the process of planning, organizing, directing, and controlling an organization's activities to minimize the harmful effects of risk on its capital and earnings. ERM can include financial, strategic, and operational risks, as well as risks associated with accidental losses
Establish risk appetite
Identify risk
Risk assessment
Response to risk
Risk Management Approaches
- Risk Identification: This involves identifying potential risks that may impact an organization’s financial stability. Risks may include market risk, credit risk, liquidity risk, operational risk, and reputational risk.
- Risk Assessment: Once the risks have been identified, the next step is to assess the likelihood and potential impact of each risk. This helps prioritize the risks and determine which risks are the most significant.
- Risk Mitigation: After assessing the risks, the organization needs to determine the most effective ways to mitigate the risks. This may involve implementing controls, hedging strategies, insurance, or other risk management techniques.
- Monitoring and Review: Once risk mitigation strategies have been implemented, it is important to monitor and review the effectiveness of these strategies. This helps ensure that the organization is prepared to deal with any new risks that may arise in the future.
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