AN ANALYSIS OF CURRENT RISK ASSESSMENT PRACTICES IN COMMERCIAL BANKS

Abstract

Modern banking is based on maintaining an appropriate balance between risk and return. Rather than seeking to eliminate risk entirely, commercial banks aim to identify risks promptly, assess them quantitatively and qualitatively, and accept them within their established risk appetite. Risk assessment is therefore an integral part of lending, asset and liability management, new product development, capital and liquidity planning, and strategic decision-making.
Financial market volatility, the expansion of digital banking services, remote lending, and the implementation of automated decision-making systems are changing both the ways in which banking risks materialise and the speed at which they spread. Alongside credit, liquidity, market, and operational risks, increasing importance is being attached to cyber risk, model risk, data quality issues, and dependence on third-party technology service providers.