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GRC Professional : GRC Summer 2012
Types of risks faced by banks • Market risks: fluctuations in markets such as sharemarkets and bond markets. • Currency risks: from changes in currency. • Credit risks: the ability of mortgagees and businesses to pay back their loans. • Interest rate risks: from changes in interest rates, especially the gap between what the bank has to pay out itself and what it receives in interest from customers. • Liquidity risks: the ability of the bank to access funds, such as borrowing from international markets, and new business from customers. • Economic risk: from changes in the economy. • Regulatory risk: from changes in legislation and regulatory requirements. • Enterprise risks: company-wide risks such as reputational damage. • Environmental risks: includingnaturaldisasters. A few years back, stress testing was much more heavily focused on the credit and market risks. After the GFC, there is a lot more focus on liquidity. 19
GRC Spring 2011
GRC Autumn 2012