Types of Risks faced by a Bank

One of the most popular question in bank interviews is - What are the various kinds of risks faced by a bank ?

If you try to answer this in general terms, then this would make a negative impact in interviewers mind. So here are various types of risks faced by a bank

Market risk

Risk arises due to fluctuations in market price of marketable securities. Bank generally invests in equity shares, loss arises to bank due to fluctuations in equity market is known as market risk.

Interest rate risk

IRR arises due to fluctuation in the interest rate. If a bank had a lot of fixed deposits, fall in interest rate will cause loss to bank. Similarly, if a bank had a large amount of fixed interest rate loans, increase in interest rate will cause losses.

Foreign exchange risk

Banks may have large foreign exchange assets due to mismatch of the maturity date. Fluctuations in exchange rate cause loss to the bank.

Operational risk

Risks arise due to the failure of day to day activities, system or people. It includes both internal and external frauds like failures related to policies, laws, regulations, documentation or any technological risks.

Liquidity risk

Risks arise due to the inability of bank to meet its obligations and it refers to a situation when any asset may not be realized in cash. Also, we can say that it is a mismatch of assets and liabilities. It is a more important than any other risk because it has to be kept within limits, otherwise banks dependence on money market would increase.

You should read IBPS Interview series 

I have shared NPA concept in past, you should also read that.

Updated on 30-12-2016
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9 comments:

  1. Frds, How will be the job of Manager Scale 1 in APCOB. Please suggest...........pls...@lavanya

    ReplyDelete
    Replies
    1. Hello Madam how many times you will ask the same question? U have enough score in Ibps po forget about apcob

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    2. hey lavanya, manager is best, one more is that branches in hyd only so its best one.. if u have other alternatives then u have to decide.....

      Delete
  2. when is the interview result of po 3 going to be published mr. ramandeep ??

    ReplyDelete
  3. sir u r nt coming with ne news on po why?last year po2 selection list is out

    ReplyDelete
  4. hello sir, if we compare probationary officer and specialist officer then which is better po or so ?








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    ReplyDelete
  5. sir, if we compare probationary officer and specialist officer then which is better po or so ?

    ReplyDelete

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