It has been found from studies that the behaviour of a group of borrowers with similar credit rating, in terms of their default in meeting the obligations, has been found to be consistent and within bounds. With a B.A. 6. This risk arises out of a potential that the bank may be unable to meet its liabilities as they become due for payment or it is required to fund the liabilities at a cost which is much higher than the normal cost (referred to as ‘funding liquidity risk’) or that it cannot easily liquidate specific exposures without significantly lowering the market prices because of inadequate market depth or market disruptions (referred to as ‘market liquidity risk’). Segregation of dormant accounts, specimen signature cards for dormant accounts. Credit rating of an account is done with the primary objective to determine whether the account would continue to be performing after a given period of time. Market Risk (Other than Liquidity Risk): Market Risk is the risk of potential erosion of income or change in the value of assets and liabilities (on and off Balance Sheet) because of change in market conditions such as change in interest rates, exchange rates, value of bonds, yield curve, equity prices and commodity prices, etc.. Earnings risk is not a risk by itself, but various activities and risks associated with them can significantly impact the quality and potential of earnings of the bank. Portfolio risk arises due to adverse credit distribution, credit concentration, investment concentration, etc. Employees typically go through a training period or are given materials that detail the policies on acceptable behavior in the workplace. Scrutiny of transactions in staff accounts. 6. Maintenance of record of Cash Safe Keys. 1. 2. Probability of adverse impact from group entities or due to contagion effect. The banks are required to devise their own norms and procedures to identify the areas of operational risk and controlling thereof. As a consequence, there is a widening of the credit-spread risk, i.e. Balancing of accounts/ledgers and registers including checking thereof by branch officials at regular intervals. Adherence to tender procedures and delegation of powers for procurement of assets and other expenses. Adherence to Income Recognition norms. Moreover, the practice of risk management can help customers gain a sense of trust with the bank, which in turn may engender customer loyalty. Identification of borrower and verification of antecedents through market reports/status reports from the previous bankers, credit rating agency of repute, etc. Risk management in banking is theoretically defined as “the logical development and execution of a plan to deal with potential losses”. 5. Sorting of issuable and non-issuable notes regularly. Prohibited Content 3. Credit risk represents the major risk faced by banks on account of the nature of their business activity. 3. In banking, there are many types of risk management programs that may be used to diminish the possibilities of monetary loss, lawsuits, and employee safety. Image Guidelines 5. Monitoring of access to the Server Room strictly as per systems and procedures manual. 6. Business Strategy and Environment Risk: This risk arises on account of inappropriate or non-viable business strategy adopted by the banks; its total absence and the business environment that the bank operates in, including business cycle that the economy may be passing through. 1. 6. All the functional areas of a bank are exposed to operational risk and the Basel Committee has recommended tools and approaches to quantify and allocate capital for the probable operational loss. //]]>. 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