RM- Project - Risk Capital at a Bank

Bank Risk Types and Trends

Jessica Seifert

Rasmussen College

Bank of America is one of the largest banks in the globe. It has a fragmented customer base since it can get operated via email as online banking. One fundamental purpose of the business is to better the livelihood of their clients through financial assistance and investments that they offer. Bank of America just like any other banks out there if faced with some risks. These risks include credit risk, market risk, operation risk, liquidity risk, systemic risk, business risk and reputation risk.

Credit risk involves the uncertainty that a loan borrower will not honor the pledge of paying debts. In the event this happens then the bank will undergo a significant loss depending on the amount of loan it had issued out. Market risk, on the other hand, refers to losses that may occur as a result of market movements. This loss mainly takes place in banks that participate in capital markets.

The other type of risk is the operation risk that gets associated with failed internal processes and the people involved. Process risk can facilitate through errors performed by individuals working in the banking industry. Liquidity risk is a type of risk that may happen to a bank if it cannot be able to pay its debts. The government can take up a bank if this happens. Systemic risk affects all the business in a country, and it is very hard to control and avoid. Finally, business risk is when a bank is unable to make profits over time.

In my plan, I will document have all the roles and responsibilities in risk management and have them well documented as well as have an adequate budget for the risk management project. I would also have appropriate timing for the first risk assessment. Finally, I would be ensuring that the risks get acted upon depending on their importance. It is important to have a good cover for all types of risks that a bank may be in danger.

References

Saunders, A., & Cornett, M. M. (2014). Financial institutions management. McGraw-Hill Education

Dandapani, K., Lawrence, E. R., & Patterson, F. M. (2017). The Effect of Holding Company Affiliation on Bank Risk and the 2008 Financial Crisis. Studies in Economics and Finance, 34(1)

Langfield, S., & Pagano, M. (2016). Bank bias in Europe: effects on systemic risk and growth. Economic Policy, 31(85), 51-106

Module 01 Course Project - Bank Risks Types and Trends

Scoring Rubric:

Criteria	Points	Points Received
Selected a publicly traded bank	15	15
· Briefly introduce the content of the paper including a sentence about risk types and trends · A sentence about risk mitigation · A sentence about credit risk · A sentence about lending practices · A sentence about capitalization and solvency	80	70
The length of the introduction is 1 - 2 paragraphs in length and demonstrates proper APA mechanics	5	2
Total	100	87

You did a great job introducing Bank of America as well as covering most risk topics listed in the rubric about this organization. You did not talk about lending practices. Make sure when writing the papers you cover each requirement.

You did a good job including a reference page but you did not cite any of these within the text. All references must be cited at least once per source and where used. Make sure to include going forward as papers will be returned without.