Risks of Modern Banking Activities

Banking activity is inherently associated with various risks and threats, which are continually evolving, acquiring new features, and presenting new challenges. To effectively manage these risks and minimize their negative impact, it is essential to understand their nature, characteristics, interactions, and impact on the overall risk level in banking activities. This includes knowing how to detect, identify, evaluate, and mitigate or eliminate their negative consequences. Furthermore, it is crucial to comprehend the principles and structure of an effective and efficient risk management system within the bank. This involves understanding the distribution of responsibilities among the bank’s divisions concerning risk management, the specifics of corporate governance, the decision-making process, and the construction of an effective organizational structure. This structure should establish goals and methods for achieving them, monitor activity results, and outline the system of relationships between different levels of management, shareholders, the board of directors, and other stakeholders. This chapter is dedicated to researching and clarifying these issues.