Analyzing banking risk : a framework for assessing corporate governance and risk management

"Many models exist for analyzing risk of banks and other corporate entities. This publication aims to complement existing methodologies by establishing a comprehensive framework for the assessment of banks, not only by using financial data but also by considering corporate governance. It takes as axiomatic that each of the key players in the corporate governance process (such as shareholders, directors, executive managers, and internal and external auditors) is responsible for some component of financial and operational risk management. This fourth edition of Analyzing Banking Risk remains faithful to the objectives of the original. The additions include new capital and financial risk management aspects, such as Basel III capital adequacy aspects, as well as the new operational risk management topics such as cybercrime, money-laundering and outsourcing. The book specifies key principles and uses basic tools and techniques of financial risk analysis to demonstrate how data can be converted into information through graphic highlights of risk trends that can alert senior management and boards when action may be required. Given the recurring turmoil in the financial markets, this approach demonstrates the power of basic risk management principles in assisting the non-specialist director, executive, or analyst to integrate various risk areas and ensures that the interrelationships between different risk categories are clearly portrayed. The proposed framework also recognizes that some risks might be immaterial in less sophisticated environments. This publication emphasizes risk management principles and is useful to a wide body of readers. The target audiences are those responsible for the analysis of banks and for the senior management of organizations directing their efforts. Since the publication provides an overview of the spectrum of corporate governance and risk management principles, it is not aimed at the narrow technical specialist who focuses on only one particular risk management area. Since the first edition, the publication has been used for graduate courses in banking risk analysis, as well as in many risk analysis workshops"--