Risk Definition in Banks
2 Pages Posted: 12 Jan 2021
Date Written: May 16, 2019
What are the risks? The community needs to take risks, all forms of human activity carry risks, there is no such thing as "risk-free". If society avoids risk, there would be no investment and no exploration. Is it possible to imagine this world without risk? that the human race would end, because of the unwillingness to accept the dangers of childbirth? On the other hand, we know well the consequences of carrying a lot of risks: asset bubbles, financial crises, and, ultimately, economic stagnation. So, banks, as providers of risk capital to the real economy, need to "risk management" so that they are not destructive to either party. Getting it wrong would damage not only the owners of and investors in the bank, but society as a whole.
Keywords: Risk definition, Banks
JEL Classification: G210
Suggested Citation: Suggested Citation