RM- Project - Risk Capital at a Bank

Mitigating Bank Risks

Rasmussen College

March 5, 2017

Members of the board of directors

There are different roles and responsibilities assumed by an organization board of directors which includes the general manager or rather the chief executive officers. The board of trustees has the responsibility of hiring the CEO or the general director and examines the general direction and business strategy (Firoozye & Ariff, 2016). The board officers are chosen by the board of trustees and also offer directions for the company in every aspect. In a bank, the board of directors bears the fiduciary responsibility is protecting the organization’s assets and bank member’s investments. It means that they have to ensure that the company’s assets get kept in order. Apparently, the board of directors is a collection of people attempting to work as a team. The bank culture helps in the evolution of the Council, and each culture gets stated by the personal backgrounds on the board.

Executive Committee

The executive committee is picked by the owners’ corporations to assist in daily operations and decisions on ways to run a scheme. In the NWS the maximum number of the executive committee members is nine. There are some matters that the executive committee do not bear the power to make, but whatsoever any decision made by the executive committee is treated as a decision of the owner's corporation. The committee has enormous discretion about what and how decisions get made, although various acts and regulations govern its powers. The CEO makes the organizational decisions and ensures that the operations are running accordingly. The CFO spearheads all the financial transactions of an organization. To qualify for such a position (general manager) the individuals are expected to have seven years’ experience as a committee head and having acted as a paid back manager. Different locations have different qualifications though it is important to have particular skills and experience in banking. Sarbanes-Oxley Act and legislation impact

A new era of business responsibility and accountability for the public companies was born, with the passage of the Sarbanes-Oxley Act in 2002. The act goal was the restoration of the investor faith in corporate financial reporting reliability. In this context, the Act has significantly been an unmitigated success, and there has been the strengthening of the audit process (Onyiriuba, 2016). It means that accountants have focused on the review, attained, higher independence from their clients though now topic to rigorous oversight and precluded from providing particular non-audit services. Following the Act enactment, there was the passage of the legislation that it got expected that a bank would have an audit committee made of primarily independent directors whose role and responsibility is to oversee task for the selection and compensation of the bank's external auditors.

Asset liability management

In banking organizations, asset-liability management is the act of managing several risks that come up as a result of mismatches between bank’s assets and liabilities. There are various risks faced by the banks such as assets risks, interest, and currency exchange uncertainties among others. Asset-liability management gets used as a risk mitigation tool in managing rates of interest risk and liquidity risk. Financial institutions manage the asset-liability risks through various assets duration match, hedging, and securities. Asset-liability management is an important aspect in banks because it is a risk management approach designed to earn sufficient revenue while holding a healthy asset surplus above the liabilities. Liquidity risks arise when a bank has less cash to cover the current liabilities at a particular time, and it gets mitigated by an increase in asset liability ratio (Carbó Valverde, 2016). The best way to avoid currency risk is through the mismatches are reduced to zero or almost to zero.

References

Firoozye, N. B., & Ariff, F. (2016). Managing Uncertainty, Mitigating Risk: Tackling the Unknown in Financial Risk Assessment and Decision Making. Houndmills, Basingstoke, Hampshire: Palgrave Macmillan.

Onyiriuba, L. O. (2016). Bank Risk Management in Developing Economies: Addressing the Unique Challenges of Domestic Banks. London: Academic Press.

Carbó Valverde, S., Cuadros Solas, P. J., & Rodríguez Fernández, F. (2016). Liquidity Risk, Efficiency and New Bank Business Models. Cham: Palgrave Macmillan.

 Module 03 Course Project - Mitigating Bank Risks

Scoring Rubric:

Criteria	Weight	Points Received
Identified members of the board of directors and the significance of their role at the bank	10	5
Identified members of the executive committee and discussed their qualifications for their positions	20	10
Discussed the impact of the Sarbanes-Oxley Act and other legislation on the financial reporting for the bank	35	25
Discussed asset-liability management at the bank	30	15
The assignment met the minimum page length of 3 to 4 pages, demonstrated the use of library resources, and demonstrated proper APA mechanics	5	5
Total	100	60

You did a good job discussing how the board of directors are picked but you did not identify any members for your bank specifically. You also did a good job explaining how the executive committee is selected but you did not name anyone specific and discuss their specific qualifications. Good job discussing the impact of the Sarbanes-Oxley Act and the asset liability management practices as a whole but nothing specific to the bank you chose for your project. The papers for the course project all need to be specific to the bank you are researching.

APA formatting was also written well. If you would like to resubmit with all the requirements, make sure to have your paper turned in by Saturday at 11:55pm CST.

Thanks,