Question

What are the types of bank risks?

Answer 1

There are eight types of bank risks. These are

Credit risks, market risks, operational risk, liquidity risk, business risk, reputational risk, systematic risk and moral hazard. Credit risk, operational risk, market risk are usually larger isks.. Credit risk is due to default of borrowers,, market risk is due to reasons which effect overall financial activity, operational risk is due to inadequate or failed internal processes, people and systems. Liquidity risk means bank is not enough liquid to meet short term financial demands,, business risk is due to lower profits or due to losses, reputational risk as the name indicates is risk due to loss of reputation, systematic risk is risk to entire market which usually consist of fluctuations in stocks, moral hazard occurs when those who have taken loans etc from bank indulge in activities which are harmful to bank