on the importance of credit risk management of the banking sector are enormous. Often facing banks and other financial institutions with the risks that are mostly of a financial nature. These institutions must be a balance between risk and returns as well. One of the banks have a large consumer base, and must provide reasonable loans enough products. However, if the interest rate is very low loan products, the bank will suffer losses. In terms of shareholders' equity, it must have a bank a large sum of money in reserve, but not so much that it lacks investment returns, and not too little that it leads itself to financial instability and the risk of non-regulatory compliance.
credit risk management, in terms of funding, and refers to the process of the risks that come in the investment evaluation. Risk often comes in investment and capital allocation. You must risk assessment in order to draw sound investment decisions. Similarly, the risk assessment is also critical in coming up with a position to achieve a balance between risk and return.
facing the banks down with risks. There are some risks in the process of granting loans to some customers. There could be more of the risks involved if the loan was extended to debtors unworthy. Some risks may also come when the banks securities and other investments suffered from forms.
risk of losses that lead to defaults of debtors is the kind of risks that must be expected. Because many banks' exposure to risk, it is only reasonable for the bank to maintain a large amount of capital to protect the solvency and maintain economic stability. Basel II agreements provide data on the organization of its capital to the bank in connection with the allocation of risks to the bank's level. It must be greater exposed to the risks of the bank, the greater the amount of capital increased when it comes to its reserves, so as to maintain the solvency and stability. To determine the risks that come with lending and investment practices, should banks risk assessment. Credit risk management must play a role after that to help banks to be in compliance with Basel II and other regulatory agencies.
management and assessment of the risks faced by banks, it is important to make certain estimates, conducting monitoring and conducting performance audits of the bank. However, because banks are lending and investment practices, it is appropriate to make the reviews on loans and checking and analysis of investment portfolios. Review and analysis of loan portfolios are critical in determining credit and investment risks.
complexity and the emergence of various securities and derivatives is a factor on the banks must be active in risk management. Credit risk management system used by many banks today have a complexity. However, it can help in risk assessment through credit analysis and determine the probability of default and the risk of losses.
bank credit risk management system is a very useful, especially if the risks are in line with the banks' survival in the business world.
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