RISK MANAGEMENT

INTRODUCTION
Risk Management in Banking Institutions need to focus on the following categories of risk:
Credit risk Market risk Liquidity risk Rate of return risk Operational risk

CREDIT RISK:
Credit risk is generally defined as the potential that a counterparty fails to meet its obligations in accordance with agreed terms. Credit risk includes the risk arising in the settlement and clearing transactions

 MARKET RISK Market risk is defined as the risk of losses in on- and off-balance sheet positions arising from movements in market prices i.e. fluctuations in values in tradable, marketable or leaseable assets

LIQUIDITY RISK:
Liquidity risk is the potential loss to arising from their inability either to meet their obligations or to fund increases In assets as they fall due without incurring unacceptable costs or losses.