Question

Bank managers are fundamentally involved in risk management. In what sense are they risk mangers? Is their risk management similar to or different from that of managers of manufacturers and other non-financial firms?

please explain thank you!

Answer 1

Bank Manager is always involved in the risk management because bank is always taking exposes into the risky assets as it is an intermediary who manages lot of risk of savers and it is also an intermediary who manages a lot of respect the part of the borrowers.

The bank is authorised to collect savings of various individuals, and it is used by the bank to issue loans to the borrowers and it has to check the creditworthiness of the borrower because when there will be no recovery by the bank, it will mean that it can make the bank liable on the part of the depositors of the bank so there is a high risk management of managing of the Assets of savers by the bank manager, so they are always into risk management.

The risk management is similar to those of financial firm, but not similar to those of non-financial firm, because their primary motive of the bank is to manage the risk of the financial assets of the depositors so it is most similar to the risk management of financial firms.