Analyzing Banking Risk

The banking activity focuses on achieving optimal results; however, like any other human activity, it is also susceptible to a broad range of risks. Banking risk as a prospective and probable event whose onset is likely to inflict losses, can be induced by clients with whom the bank enters into contract agreements, by factors associated with the organization and the functioning of the bank’s internal systems, by congruity issues between internal procedures and the general legal framework, as well as the environment in which banks operate. Concisely, the wide range of risks associated with banking activities are caused by a series of variables brought about by the involvement of credit institutions within both local and international financial systems.