Question

What are the Reputational, Liquidity, Operational, Market, Regulatory Compliance, risks that Centra Credit Union faces at the corporate level?

Answer 1

The following are the risks that the banks have to face :

Reputational Risk : Reputational risk is a threat to the good name or loss of reputation of business or entity which can occur through various ways.

Liquidity Risk : Liquidity is the ability of a business to pay off its debt obligations as and when they arise. It is the risk to earnings or bank‟s ability to meet its obligations to the customers and borrowers by converting assets into cash with minimum loss.

Operational Risk : It is the risk of direct or indirect loss that may occur from inadequate or failed internal processes of a bank. It may be the issues with people, systems or from external events.

Market Risk : Marketing risk is associated with the uncertainty of earnings on the trading portfolio of a company. This is caused by changes in interest rates, economic volatility, market liquidity or even the price of an asset in the portfolio.

Regulatory Compliance Risk : Banks are under some regulatory bodies. The risk of legal or regulatory compliancies with rules, organisation standards or codes of conduct applicable to banking industry.