Credit risk management is essential to protect capital, sustain earnings, and enable prudent growth across credit cycles, making it a foundational pillar of safe and sound banking practice. Need for a framework A formal credit risk management framework ensures risks are consistently identified, measured, monitored, controlled, and reported across the credit lifecycle, aligning day-to-day lending…
Credit risk is at the heart of banking and finance. Every loan or investment carries the possibility that the borrower may fail to meet repayment obligations, creating a serious challenge for financial institutions. A well-structured credit risk management framework helps in identifying, measuring, monitoring, and controlling this risk so that banks can protect their balance…
Subtitle: A practitioner’s guide to liquidity, solvency, measurement, stress testing, and governance IntroductionLiquidity is the ability of a bank to fund asset growth and meet obligations as they fall due without incurring unacceptable losses; solvency concerns long-term capital adequacy and balance sheet net worth. The two are related but distinct—institutions can be solvent yet illiquid…
India’s banking system is in the midst of a decisive shift driven by digital public infrastructure, AI-enabled operations, regulatory tightening, and a renewed focus on resilience and inclusion. The go-forward risk agenda must integrate technology, governance, and forward-looking stress capabilities to safeguard growth while enabling innovation. Digital rails and embedded finance Responsible AI and analytics…
Duration GAP Analysis, stress testing, and backtesting are foundational tools in a bank’s Asset-Liability Management (ALM) toolkit to manage interest rate risk and protect both earnings and economic value of equity (EVE). Structured measurement reports connect these analytics to governance, limits, and action. This article outlines a cohesive approach suitable for policy frameworks and ALCO…
Enterprise Risk Management (ERM) has emerged as a cornerstone of responsible governance and sustainable growth in the banking sector. As institutions operate in increasingly complex environments marked by regulatory pressures, technological advancements, and market volatility, a well-structured ERM framework ensures the identification, assessment, and management of both threats and opportunities. Enterprise Risk Management Defined ERM…
Banks sustain resilience by turning risk into measurable metrics, reducing exposures through targeted actions, enforcing disciplined controls, and powering decision-making with a reliable Management Information System. This article lays out a practitioner-friendly framework and templates that can drop into policies and procedures. Risk measurement Risk measurement transforms uncertainty into decision-ready metrics across credit, market, liquidity,…
In the dynamic world of banking, risk management forms the foundation of stability, trust, and long-term value creation. Banks operate in an inherently risky environment, exposed to credit risks, market fluctuations, operational challenges, cyber threats, and compliance obligations. A well-defined organisational structure, supported by a clear risk management policy, consistent appetite setting, and robust identification…
In today’s dynamic financial environment, effective risk management has become a cornerstone for sustainable banking operations. Over the decades, global financial crises and domestic challenges have underscored the importance of structured risk frameworks. For banks and financial institutions, a well-designed risk management framework not only ensures regulatory compliance but also safeguards long-term stability and trust.…
In our previous article ‘New Trends in Indian Banking and the Road Ahead for Risk Management, we have covered how India’s banking system is in the midst of a decisive shift driven by digital public infrastructure, AI-enabled operations, regulatory tightening, and a renewed focus on resilience and inclusion. Also the go-forward risk agenda that must…
