The most complicated and main risks faced by banks are

Bank risk refers to the possibility that the bank's assets and expected income will suffer losses due to various uncertain factors during its operation. The risks of banks have unique characteristics. This is manifested in the following aspects: it belongs to high debt management; The bank's business object is currency, which has special credit creation function; Banks are the center of market economy, and the external negative effects of their risks are enormous. Bank risks mainly include credit risk, market risk, operational risk, liquidity risk, national risk, reputation risk, legal risk and strategic risk. 1. Credit risk Credit risk, also known as default risk, refers to the possibility that the debtor or counterparty fails to perform the obligations stipulated in the contract or the credit quality changes, thus bringing losses to the bank. For most banks, credit risk exists in almost all their businesses. Credit risk is the most complicated risk category of banks and the most important risk that banks face. 2. Market Risk Market risk refers to the risk that a bank's on-balance-sheet and off-balance-sheet business suffers losses due to adverse changes in market prices (including interest rates, exchange rates, stock prices and commodity prices). Market risks include interest rate risk, exchange rate risk, stock price risk and commodity price risk. 3. Operational risk Operational risk refers to the risk of losses caused by imperfect or problematic internal procedures, personnel and systems or external events. Operational risk can be divided into four types of risks caused by people, systems, processes and external events, and can be divided into seven forms: internal fraud, external fraud, problems of employee employment practices and workplace safety, problems of customers, products and business practices, damage to physical assets, business interruption and system failure, and imperfections in execution, delivery and process management. Operational risk exists in all aspects of banking business and management, and it is convertible, that is, it can be transformed into other risks such as market risk and credit risk. 4. Liquidity risk Liquidity risk refers to the possibility that a bank cannot meet its customers' liquidity needs in time without increasing costs or losing the value of assets, thus causing losses.