Question

Discuss different types of risks the Commerz bank AG manages. Gather evidence and discuss whether these risks have been sufficiently managed since 2005?

Answer 1

Commerz Bank AG is one of the largest bank of Germany and it has a global presence and operating around 50 countries. Different types of risk managed by this bank are as follows-

A. It has to deal with management of foreign currencies and fluctuations in foreign currency risk so it can be said that it is exposed to foreign currency movement.

B. it is also subjected to the monetary policy risk of various countries because it has a global presence and it is subjected to follow monetary policies of various Central banks across the globe.

C.it will also have to face credit risk as well as default risk on its security across the globe because there has to be high introspection of the creditworthiness of various borrowers around the globe.

D.it is also exposed to various kinds of political risks which is arising out in various countries which can be impactful through the rules and regulations formations across the globe.

these risks have been sufficiently managed since 2005 but in the later part of this decade, the bank has found it very difficult to maintain with its profit margins because of increasing trade tensions between different countries and low interest rates are also hurting it's overall profitability of this Bank so this bank is also not able to maintain with its operational efficiency and profit margin as well. There has been continuous miss on its corporate profit targets, quarter after quarter.