FINANCIAL RISK MANAGEMENT IN THE BANKING SECTOR

Abstract

Abstract - Financial risk management is a vital activity in the banking industry, which seeks to identify, measure, and reduce risks that could have an impact on the profitability, stability and sustainability of a bank. Financial risks experienced by banks are of diverse type such as credit risk, market risk, liquidity risk, operational risk, and interest rate risk. Sound risk management practices help banks to be financially stable, meet regulatory demands and safeguard the interests of its stakeholders. The paper will look at the concept, significance, types, difficulties, and strategies of financial risk management within the banking industry. It also examines how technology and regulatory frameworks can help in improving risk management practices.

Keywords: Financial Risk Management, Banking Sector, Credit Risk, Market Risk, Liquidity Risk, Operational risk, Basel Framework, Risk Assessment.