Write notes on risk management and risk communication.
Define risk management:- The concept of risk can be
characterised as the possibility that events, whether anticipated or
unanticipated, may negatively affect a bank's earnings, capital, or both. The
definition includes both risks with high likelihood but low impact as well as
dangers with low probability but large impact. The discussion would benefit
from using this working definition. Remember that risk and expected return are
strongly correlated at this point; the higher the risk, the higher the expected
return, and vice versa. Any organization's risk management department is
responsible for ensuring that systems and procedures are established in
accordance with the institution's risk management policy.
They are devided into some parts:-
1. Credit Risk: The oldest risk in the financial system is
credit risk, which is notably prevalent in banks and other financial
institutions because of the intermediation process. The heart of these
institutions' expertise is credit risk management. Although the risk is widely
understood, the way credit risk is assessed and managed in the current context
has altered as a result of market expansion, disintermediation, and the
introduction of a number of novel goods and activities. According to studies on
bank failures in the US, credit risk alone was responsible for 71% of major
bank failures between 1980 and 2004.Credit risk is described as "the risk
to a bank's earnings or capital base stemming from a borrower's inability to
comply with the terms of any contractual or other agreement it has with the
bank" by B. Simon Hills of the British Bankers Association. Every activity
that depends on counterparty, issuer, or borrower performance entails some
degree of credit risk.
Interest Rate Risk: establishes and rate-paying obligations
of a bank. The measurement, control, and management of IRR in the banking book
are included in the scope of IRR management. Interest rate volatility has
significantly increased since interest rates were deregulated. As a result, the
banking industry in our nation has undergone a permanent transformation from a
volume-driven industry to one that requires careful planning and selection of
the assets and liabilities it will take on to meet profitability goals.
Write notes on risk management and risk communication.-IRR can be approached in two different ways. They are the
Economic Value Approach and the Earnings Approach.
2.Liquidity Risk: The danger of the bank's inability to cover its obligations in the form of cash outflows with its current inflows of cash is known as liquidity risk. This risk develops due to insufficient cash and near-cash assets, such as drawing rights, to cover current and foreseeable liabilities. Trading liquidity risk and funding liquidity risk are the two categories under which liquidity risk is broken down. Due to the illiquidity of the securities in the bank's trading portfolio, there is a risk associated with trading liquidity. Due to diverse balance sheet techniques adopted by various institutions within the same industry, funding liquidity risk develops as a result of the cash flow mismatch.
It is very feasible for some banks to have excess funding
liquidity, while other banks could experience a liquidity deficit.
Risk communication is the real-time
exchange of knowledge, suggestions, and opinions between professionals or
officials and those who are threatened (by a hazard) with losing their lives,
their health, their livelihood, or their social or economic standing.
Also Read-
What are the benefits and barriers in implementing HACCP? Explain the principles of HACCP.
There types:-
1. Public Relations: High Hazard, Low Outrage:-
Apathetic viewers are by definition characterised by little
outrage. It will be exceedingly tough to capture and maintain the interest of
this audience, so discovering your core point and condensing it into as few
words as you can while yet managing to make it engaging is crucial. The aim is
frequently to incite more indignation because the risk is considerable, or at
least higher than the outrage.I Call this paradigm public relations as
communicating to uninterested parties is at the heart of PR. But environmental
action, safety training, and health education also fall under this umbrella.
Industrial hygienists most frequently engage in risk communication where they
encourage others to take certain risks seriously.Given the size of the
uninterested population, mass media is likely to be used extensively in
high-hazard, low-outrage risk communication. Audience inattention, audience
size, media resistance, the necessity to condense everything into succinct
sound bites, and the political repercussions of trying to incite anger are some
of the obstacles that must be overcome. The upside is that this audience has
few, if any, concerns, reservations, or objections, thus there isn't much need
to listen or answer them. But be prepared to switch up your approach when the
crowd starts paying attention.
2. Stakeholder Relations: Moderate Hazard, Moderate Outrage:-
Stakeholder relations focuses on interpersonal communication in place of mainstream media, with the help of more specialised media like newsletters and websites. There are no real obstacles to overcome, but a one-on-one conversation can be excruciatingly ineffective. Additionally, since this is the only audience that genuinely wants to hear the technical specifics, you must be ready to do so.The type of risk communication that industrial hygienists (and everyone else) prefer best is stakeholder relations. The other three types of risk communication seek to duplicate it.
3.Outrage Management: Low Hazard, High Outrage:-
The audience is upset, mostly because of you. Although the outrage may be legitimate in a non-technical sense (for instance, you might have been less than honest or courteous), it isn't legitimate technically because the risk is modest. A bigger, less upset constituency that is interested in following the controversy's development is typically present alongside a core group of "fanatics." By listening, acknowledging, apologising, sharing control and credit, and other strategies, it is necessary to lessen audience outrage. When the "fanatics" declare victory or their constituency believes they have won enough, the debate is ended.Historically, industrial hygienists have viewed themselves as "Watch out" communicators rather than "Calm down" communicators. However, in recent years, managing risk disputes and the enraged employees and neighbours they cause has become an essential - and unwanted - component of many I.H. employment.In-person conversation is the preferred method of outrage control, but this time the "audience" speaks more than usual. Barriers include the audience's and your own fury at the audience, accepting the necessity of emphasising outrage when you'd really want to discuss content, and occasionally the media's confounding presence.
Write notes on risk management and risk communication.- The bright side is that,
despite their hostile (or at the very least, extremely sceptic) attention, at
least you have it.
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