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“Banks are inherently risky enterprise” explain this statement and ways regalotors attempt to resuce system wide...

“Banks are inherently risky enterprise” explain this statement and ways regalotors attempt to resuce system wide banking risk?
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Answer #1

Inherent risk means the probability of a finanafinor material loss due to uncertainty caused from present and future events.

Since banks are involved in all such operations related to the financial services, it is inherently risky enterprise as it is liable for the services it provides to it's customers.

Credit risk, interest rate risk, liquidity risk are some examples of such risks.

System wide banking risks can be rescued through:

a. Appropriate organizational structure

b. Appropriate information system and control system

c. Proper system to maintain capital adequacy

d. Proper strategies to identify, measure and metigate risks.

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