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Risks - Coggle Diagram
Risks
How did fraud happened ?
Employees training
Gap in policy and implementation
decentralization of banks
managers concerned about performance than risk
lack of internal controls on transactions
large number of accounts opened
address of customers not verified
large number of foregin transactions
funds immediately transferred to foreign bank
Types of Risks
Credit Risk
Operational Credit Risk
customer life cycle
Operations Risk Management
Identify hazards
assess hazards
make decision
implement contrls
supervise
Operational Risk
Acquisition
PD
approval
Objective
Underwirting decision - How much credit
Approval decision
data
internal data
social media
credit bureu
model 3-5 years
reject inferencing
new applicants
Exisitng customer management
monitor rating
monitor behavior
model - 1-2 years
roll rate matrix
vintage analysis
Collecton and recovery
deliberate defaults
extent of loss
model - 2-6 weeks
action effect
Metrics
Short term
first time payment
payment hierarchy
cash withdrawal
credit overutilization
Long term
discriminatory power
accuracy
stability
Operational Risk Analytics
Deliquency
Early
Self cure
Identify self cures
Non Self cure
Identify collection action
Late
Soft coercion
Sell off
Secured Products
repossession
periodic credit obligation
roll rate matrix
vintage curve
Regulatory Credit Risk
Expected Loss
Robust quantitative models
What if analysis
Probability of default
Loss if default
Exposure default
unexpected loss
PD, ED, LGD, Asset correlation
Pre-provision net revenue = net-revenue + expected losses
Macro-economic factors
GDP contraction
Inflation
unemployment rate
monte-carlo analysis
survival analysis
dual time dynamics
endogenous
exogenous
Fraud Risk
Operational Risk
Market Risk
Risk Management Framework
BOD -
Risk management system
CEO
Risk comittee
Non-executive director
Audit
Risk Assessment
Probability
Severity
Catastrophic
Severe
negligible
moderate
Risk assessment code
Fraud Handling
Anti-money laundering law
Customer identification
Customer acceptance
Transaction monitoring
Coordinating with financial intelligence
Employee training
Know your customer
Balancing Risks and Returns
Loan to few risky customers
Risk Analytics
Goals
Credit Loss
Cost of capital
Cost of provisioning
Bill discounting