RISK MANAGEMENT

"The core focus of the Basel Accord Standards and related regulatory proposals revolves around the recognition and proactive mitigation of potential risks as an integral part of an organisation's strategy. The aim is to address these risks in a proactive manner, ensuring that appropriate measures are in place to mitigate their impact and safeguard the stability of the organisation" by Vincent Santeng.

Effective risk management involves identifying, analysing, evaluating, and responding to risks to meet stakeholder expectations. Each organisation faces unique risk types, magnitudes, and impacts, making Basel Accord Standards a general guideline. Regulators recognise this distinctiveness and allow internal risk models. The Accord primarily addresses credit risk, market risk, operational risk, and liquidity risk.

Credit Risk

Market Risk

Operational Risk

Liquidity Risk

Managing possibility of borrowers default for outstanding principal amount. Consideration for the borrowers status is relevant.

Managing possibility of losses in possitions due movement in market prices, interest rates and volatitities.

Managing risks inherent with structures, engaging people and implemented internal processes.

Managing and ensuring that an entity would meet its financial obligation when due, Use of ALM helps maximise returns.

Risk Management Cycle

At BACT Centre, we prioritise a proactive and flexible approach to adapt to changing business environments and processes. We dedicate resources to study new products, market developments, legislation, compliance, financials, risk management, and technology. Our training and implementation cover all stages of the risk management cycle.

Risk Identification

Risk Analysis

Risk Evaluation

Risk Response

Risk indentification correlates with timing of undertaking. The process acknowledge and confirms there is no risk-free event, and that possibility of adverse results could be endless if risk factors are ignored. Basel Accord places emphasis on this stage.

Risk analysis process would acknowledge and confirm an event must be managed carefully. Regulators are keen to see evidence of risk analysis forming part of management considerations with compromise. Software investment is not aviodable.

Risk evaluation requires engaging know-how personnel and tools to arrive at reasonable conclusion. Evaluating risk factors could be considered as part of an entity strategy and a path to success. Appitite to managing risk could be critical deciding factor.

Response to managing and controlling identified risk elements depends of many factors including type risk, severity of occurence in terms of loss, cost associated with corrective measures and ease of mitigating, senior management approach and regulators expectations.