Financial Services Banking Risks are divided into:
- operational risks
- technological hazards
- risks of innovations
- strategic risks
- accounting risks
- administrative risks
- risks of abuses
- risks of safety
Operational risks of the bank include risks of increasing the cost of the bank 's services and increasing current costs (for example, risks related to inability to reimburse administrative and economic expenses).
Risks of failure of technology of operations (risks of failure of a computer system, loss of documents belong to technological hazards due to the lack of storage and iron cases, failure in the SWIFT system, a mistake in concepts of a system, incommensurable investments, cost of the lost or damaged computer equipment, loss or measurement of a system of electronic audit or logical control, vulnerability of a system, computer fraud, destruction or disappearance of computer data).
Security risks consist of overall bank security, internal and fire safety risks.
Risks of innovations consist of design risks (risk of unique projects, intra bank risk, a market or portfolio risk), selective risk (risk of the wrong choice of innovations), temporary risk (the wrong definition of time for an innovation), risks of lack of necessary means, risk of change of the legislation towards cancellation of a type of activity, new to bank.
Strategic risks are risks of non receipt of the planned profit as a result of excess of admissible risk, risk of the wrong choice and incorrect assessment of the size and degree of risk, risk of the incorrect decision of bank (For example, risk of repeated extension of the same loan), risks of incorrect determination of terms of operations, absence of control over bank losses, incorrect financing of losses, incorrect choice of risk management methods (For example, obtaining a guarantee of a legal entity instead of issuing a pledge agreement), etc.
All of them from certain positions characterize the quality of bank management.
Accounting risks include: risks of loss of money due to incorrect or late accruals, damage to the bank 's reputation in the eyes of third parties, as well as risks of fraud due to a large number of uncontrolled postings, easy access to accounting and its simplified scheme.
Administrative risks are usually related to the loss of payment and other documents.
Administrative risks are closely related to risks of bank abuse, which are related to currency speculation, securities speculation, regulation of loan volumes and interest rates for the purpose of "pressure" on the client, possibility of influencing the financial condition of the client, violation of credit and contractual relations by the bank with the deliberate purpose, participation in collusion, incorrect examination of projects and consulting with intent of theft, waste, deception.
The so-called competitive risks for banks are related to the possibility of merging banks and non-bank institutions, the emergence of new types of banking operations and transactions, the reduction of the cost of services of other banks, the increase of requirements to the quality of banking services, the ease of emergence of new banking institutions, the complexity of bankruptcy proceedings of banks.
Macroeconomic risk is related to the violation of the main proportions in the economy of the country and the effect of unfavourable financial factors.
Translation risks include:
- lack of currency;
- liquidity risk of foreign trade and investments, balance of payments;
- future default;
- revision of the contract;
- revision of the plan;
- changes in the value of foreign exchange assets and liabilities in the national currency unit.
Organizational risks include:
- absence of skilled staff;
- Lack or lack of commercial and financial information, etc.