What are the risk management of commercial banks?

The risk management of commercial banks mainly includes four aspects: risk identification, risk analysis and evaluation, risk control and risk decision. The risk management of commercial banks is a management activity for commercial banks to reduce the risks they may suffer in their management activities. Good risk management helps to reduce the probability of decision-making mistakes, avoid the possibility of losses, and relatively increase the added value of the enterprise itself.

The operational risk management of banks involves not only the internal procedures and processes of banks, but also the organizational structure, policies and operational risk management processes of banks. For institutions, there should be appropriate policies to deal with operational risks. First of all, we must determine these policies and inform the employees of the whole bank. In this process, several aspects should be considered:

First of all, we should have a clear governance structure and know who to report to under what circumstances. In a typical bank case, there should be a separate credit risk management organization, and different business departments should be responsible for the daily business management, that is, there are two reporting mechanisms to report the daily operation to the managers of such business departments.

Regarding credit, you must report to the relevant credit manager. There is also a very important point in the information involved in banks, that is, the people who get the information and the details of different levels of information. For example, what the board of directors needs is a common information, and it is impossible to give everyone the same information. In addition, information should be flexible and flexible methods of collecting information are needed.