Article

Risk Management in Banking

Linda Allen and Anthony Saunders

in The Oxford Handbook of Banking

Published in print January 2012 | ISBN: 9780199640935
Published online September 2012 | | DOI: http://dx.doi.org/10.1093/oxfordhb/9780199640935.013.0004

Series: Oxford Handbooks in Finance

 Risk Management in Banking

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Banks are exposed to market risk, interest rate risk, credit risk, liquidity risk, and operational risk. For any bank, the measurement and management of risk is of the utmost importance. This article describes the widely used VAR method of risk measurement. Accurate risk measurement enables banks to develop a risk management strategy, using derivative instruments such as futures, forwards, options, and swaps. However, the recent subprime crisis demonstrates that the use of derivative instruments does not by itself mitigate the risks of banking.

Keywords: risk exposure; risk measurement; VAR method; derivative instruments; subprime crisis; banking risks

Article.  10259 words. 

Subjects: Economics ; Financial Markets ; Public Economics

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