What is a good thesis topic in the sector of Bank and Finance or Risk me, please. It would be nice if topic is in the sector of Bank and Finance or Risk Management. Basel framework; operational risk; risk management ; risk indicators In a document issued in by the Basel Committee of Banking the present study attempts to provide empirical evidence to support these.
Risk Management In the dissertation , case study method will be used because it will help in nbsp; Problems of Evaluation and Management of Operational Risks in Banks in regional bank: Seminar is intended to help Students address their Dissertations which Financial risk assessment in Bank G or in a global company H. Foreign Exchange Risk Management in Commercial Banks in arises when a bank holds assets or liabilities in foreign. Subject Areas for Banks.
Theses and Dissertations — Finance, Risk Management amp; Banking This LibGuide guides researchers in the filed of Finance, Banking and Risk Management to the most important resources in their filed of nbsp; What dissertation topics on credit risk management would be topics on risk management , We hope it helps.
Maintaining an efficient and effective system to help the banks to achieve its objectives. Master Thesis — Lund University Publications credit risk management should be advantageous for banks.
This chapter would include a breakdown of the results derived through quantitative analysis of all relevant variables. A descriptive overview of all results would be displaced within this chapter. The final chapter would include an overview of the methodology utilised in answering the research question, then compare the results of the research to the literature review, in a bit to accurately depict how exactly risk management affects profitability.
According Shanmugan and Bourke , financial institutions are important parts of the economy based on their main role which is to provide financial resources for economic growth. Banks are a key part of those financial institutions that provide this useful service to the economy, as they play one of the most critical roles to developing and developed economies, especially when borrowers do not have access to capital markets Greuing and Bratanovic, Loans constitute a large portion of the assets within a bank, its biggest revenue generating asset and also the most illiquid and risky Koch and MacDonald, According to Auronen , it is hard for financial institutions to distinguish good borrowers from bad borrowers, though banks rely hugely on existing technology and algorithms, thereby leading to potential adverse selection and moral hazards, being the major cause of non-performing accounts in banks Shanmugan and Bourke Knight defines risk in terms of the variability in actual outcome of an action or event as opposed to that expected, irrespective of whether that outcome is worse than expected or better than expected.
Managers and Investors are often more concerned with opposing the downside as much as possible, whilst protecting the upside benefits Meulbroek, , thereby giving rise to a seemingly skewed perception of risk within an organisation. This new ideology opposes that of Modigliani and Miller who argued that risk management should be left to investors and not the bank.
Credit risk management is relevant under conditions of incomplete and imperfect capital markets, it enables managers to stabilise their operating cash flows, which in turn helps to facilitate efficient planning of future capital investment decisions and strategic development of operating activities Froot et al, The subsequent reduction in cash flow volatility reduces the cost of financial distress within the bank; smoothes tax charges and reduces investors monitoring cost Meulbroek, Credit risk management is also preferable to investors risk management, due to the superior access of managers to risk management instruments and for other information asymmetry benefits Joseph and Hewins, Commercial banks within developed and developing economies face various categories of risk, which according to Cornett and Saunders falls broadly into financial, operational and strategic.
These risks impact differently on the performance of the bank, and the risk magnitude caused by credit risk is severe enough to cause bank failures Chijoriga, According to Chijoriga, there has been an increased number of significant bank failures in recent years, in both matured and emerging economies, and a significant reason behind these, are credit problems, especially weakness in credit risk management.
Loans constitute a large portion of credit risk, and normally account for 10 — 15 times the equity of bank Kitua, Thus banking business is likely to face difficulties even when there are slight deteriorations in the quality of loans. Modern financial institutions are in the risk management business as they undertake the functions of bearing and managing risks on behalf of their customers, through the pooling of risk and sale of their services as risk specialists.
Borrowers are assessed through the use of qualitative and quantitative techniques, which measures their subjective nature, and also assesses their attributes and base a decision on a credit score Cornett and Saunders, This according to Kraft helps to reduce the cost of processing credit application, subjective judgements and possible biases.
Rating systems signal changes in expected level of loan loss, therefore numerical models make it possible to establish what factors are important in explaining default risk, evaluating the relative degree of importance of the factors, improve the pricing of default risk, and be more able to screen out bad loan applicants and be in a better position to calculate any reserve needed to meet expected future loan losses Kitua, According to Barth et al , empirical evidence supports the notion that well-functioning banks accelerate economic growth, while poorly performing banks impede economic progress and exacerbate poverty.
Given the importance of risk management in a bank, the efficiency at which a bank manages its risk is expected to significantly influence financial performance Harker and Satvros, , as an extensive body of literature also asserts that risk management affects the financial performance of banking institutions.
According to Pagano , it is essential in creating value for shareholders and customers. Ali and Luft thereby conclude that a firm will engage in risk management policies because it enhances shareholder value by improving return on equity investments.
The proposed research would be based on the epistemological philosophical approach which accepts the existence of knowledge in a given scenario or an area of study. This philosophy has three fundamental elements which are positivism, realism, and interpretivism. The proposed study is close to positivism because theory about the present subject is explored and tested in the literature review with the aim of uncovering the salient issues concerning the issue at hand credit risks.
More so, the method allows the researcher to be an objective instrument that stands out and observe the process as an external element. According to Saunders et al this is vital to maintain validity and reliability of the outcome of the research. While there exist two main approaches to research namely; deductive and inductive methods Yin, , the deductive approach would be employed in the proposed dissertation given that the overarching objective is to examine the relationship between profitability and credit risks which requires statistical data sets.
This methodological approach has followed the viewpoint of Saunders et al , who suggests that the deductive approach is more appropriate where numbers or statistical inputs are required as in the present study. The inductive approach is not suitable because the aim is not to explore the present issue in the scenario in which it occurred. Rather, the aim is to understand the relationship between the data sets which are purely quantitative elements.
To support the deductive approach, a regression analysis would be employed to sort and analyse data. As noted by Cohen et al , regression is the method of analysis that is appropriate where a quantifiable variable is to be measured against its relationship with other factors.
The regression tests are very important to obtain a valid outcome for this study because they provide reliable information concerning the nature of relationship between some independent variables and dependent variables. Initially, the main task of the board of directors with regard to risk management was to oversee the process of risk management and ensure that rational decisions are made to ensure that there is reduced risk HSBC , pr 8.
However, after the recession, the board of governors have participated more in the process of risk management, this includes being involved in the setting of accepted risk level by the bank. The board also approves risk parameters set by other participants of risk appetite governance HSBC , pr 8. The main aim of the risk management committee is to increase the task of monitoring risks in the organization Ernst and Young The committee keeps track of the level of risk that the company is facing currently and the acceptable risk level set by the company HSBC , pr 8.
The chief executive officer is responsible for coordinating with the board of directors in creating risk management procedures and communicating to other parties in the organization any policies set by the board with regard to risk management City University , pr 8.
The chief executive officer is also responsible for ensuring that the set risk appetite is enforced throughout the organization Bozzolan , p The chief risk officer: The chief risk officer is responsible of identifying any malfunction between the set strategy and the ongoing operations Ernst and Young The business unit leaders are also faced with the responsibility of ensuring that once they receive the acceptable risk level parameters, that all provisions and escalation triggers are in line with the set parameters Ernst and Young Independent risk management and control groups: In the event of a breach, they have the power to order for the review of certain risk management policies Ernst and Young Despite the fact that banks have tried to come up with mechanisms of risk management, there are still more initiatives being conducted to devise more effective risk management strategies and polices Bozzolan , p The main focus areas of such initiatives is to develop more effective technology and reporting formats so as to improve the process of risk reduction most of the banks in the united kingdom are still developing w2ays to come up with effective risk mitigation teams and systems Ernst and Young The following are the main three procedures used by banks in the United Kingdom to improve their risk management strategies Ernst and Young The top management, shareholders, board of governors are now receiving information about risks in the organization that is more complete, detailed and presents the actual case scenario on the ground with regard to risk, this can be considered as a step further compared to the previous forms of risk reporting Ernst and Young The management reports received shows more clear data unlike the previously known ambiguous way of risk reporting.
Once a clearer and better mechanism of delivering information about risks by the various organization departments, then the organization will start considering increasing the quickness in which such reports are generated City University , pr This is one of the biggest challenges that the company executives are facing i. Many banks in the United Kingdom have established that the process of risk management is not a difficult task but, the process of analyzing and compiling the risk management reports in a way that can be easily understood and used for decision making is one of the difficult tasks Ernst and Young Most of the companies have resolved not to completely rely on past information and assumptions.
However, members of the senior management have established that the use of complex forecasting methods may become hard for the management to understand, this will make such information hard to use for decision making Bozzolan , p The current most commonly used forecasting model is one which considers future planning by putting into consideration results which are less probable to occur but have a very high impact n the business Ernst and Young Most banks are still developing technology that will complement the risk management teams in the process of developing risk management policies and procedures so as to make the process of risk management in banks more efficient All business , pr Most bank executives have come up with ways which new technology will be applied to support the process of risk management All business , pr However, the main challenge is how to implement the most effective technological platforms Bozzolan , p The cost of incorporating information technology in the process of risk management is very high and therefore most banks in the United Kingdom are addressing the challenge posed by information technology from different angles All business Some of the banks are developing trail projects which are still being tested; other banks are organizing information technology activities in certain risk management systems whereas other are using information technology to address problems arising in their present risk management systems All business , pr As banks in the United Kingdom keep on enjoying market stabilization, Chief executives are experiencing an increase in the costs they incur in their quest to improve their management systems so as to survive the economic recession All business , pr The costs are also incurred in line when it comes to developing new policies and procedures that will assist in the process of risk management All business , pr After the recession, the reporting needs in banks has greatly increased due to more and more policies being witnessed in the industry City University , pr 5.
To match with the growing policy needs, the companies are coming up with new management systems, improving technology and reviewing their information systems, all these represent a lot of costs to the company City University , pr The banks are also incurring costs with regard to ensuring that the balance sheet reflects a better financial position after the disaster caused by the recession Barlett , p There has been increased needs in the banks to hire personnel with more knowledge when it comes to risk management and forecasting Bozzolan , p This greatly shows how the issue of risk management has escalated costs in the United Kingdom banks City University , pr 5.
The new costs are not only being incurred with regard to acquiring new manpower and designing specialized teams to deal with certain crises in the organization but also costs are being incurred by the organizations in their struggle to improve their management information system, improve reporting mechanisms and develop new technology to assist in new tasks such as risk forecasting and management Ernst and Young However the executives are not expecting any cost reduction.
The figure below shows the statistic carried out by Ernst and young about how costs are expected to rise due to increased operations in the business because of the changed attitude towards risk.
This is a trend which is going to see banks dedicate almost half of their resources towards risk management. It is now apparent that financial institutions need to come up with a strategic plan of the risks that they are facing now and the ones that they are expecting to face in the future Ernst and Young The organizations need to have a good forecast of what is in store for them.
The governments have tried to come up with regulations to govern the financial sector but the global economy is still uncertain City University , pr The banks should therefore identify the main types of risks that they are facing and expect to face, measure the probability of the risk occurring and also have the knowledge of the impact such a risk is going to have on the organization in the event that it occurs City University , pr5.
This can only be done through a thorough assessment of the current risk management position, management attitude towards risk and the acceptable risk level in the organization City University , pr Chapter3 Research design and methodology: Research methodology is one of the most important areas, which helps in making the research sound and effective in the eyes of the researchers.
With the help of this methodology, accurate information is being gathered for the selected research topic. Research methodology is considered to be an important part of the research work as it helps in generating specific answer to the research question. A sound and informative platform is provided to the researcher, which enables him to conduct the research in an effective manner.
Without the research methodology, the researcher is not able to conduct the research in an efficacious manner and somewhere or the other the research will loose its importance.
A perfect research methodology is one which has a blueprint of the research and contains ample amount of information for the researcher to read and understand. The information focuses on some key areas, which are; what is to be done, time at which the research has to be carried out, and how it will be carried out. Through this systematic information, research is carried out in a pre-determined fashion.
For the researcher to have a reliable research, it is evident that a strong and viable research methodology has to be carried out. For carrying out a research successfully, it is essential to formulate research methodology in the research as it helps in forming a particular research aims and objectives which can be achieved easily in a due course of time. Risk Management Dissertation Sample Abstract Due to globalization, not only private organizations, but also banking institutions are facing tough time.
Finally, recommendation will be drawn in context to what HSBC and Barclay are required to do for coping up with Chapter 1 Introduction The process of risk management involves recognizing risk, assessing and enumerating the level of business risk Ernst and Young Research questions From the above we are able to establish that, the level of risk management in commercial banks is becoming a very serious issue of management consideration. It is important to determine the key issues surrounding this; therefore I have formulated the following research questions to base our research What are the main reasons for the increased risk awareness in UK kingdom banks?
Is it due to increase in the amount of risk? What are the main benefits that accrue to the banks when they manage risks? Are the risk management practices by commercial banks in the UK disclosed? What are the main factors influencing risk in UK banks Objectives The following are the main objectives of the research To establish risk management methods that can be used by banks in the United Kingdom to reduce credit risk, operation risk, market risk and reputational risk To establish the parties responsible for risk management in united kingdom banks To establish measures taken by banks to reduce risk after the global economic recession Aims The main aim of this research is to assist banks improve their risk management methods so as to navigate successfully through the current global uncertain economy.
Chapter 2 Literature Review Literature review is a method, which focuses on gathering important points based on the existing knowledge, which can make this section of the dissertation an important one. Challenges to Risk Management in the UK Banks A recent research carried out by Ernst and Young shows that there are five main challenges that banks are facing with regard to risk management Ernst and Young Ways in Which Banks Are Reviewing Their Risk Management Strategies Most of the company executives believe that the way to navigate through the global economic recession successfully is to reevaluate and increase their focus on risk management and governance The Telegraph , pr1-pr 5.
Interest Rate Risk This type of risk emerges in the trading collections, the process of monitoring and analyzing interest risk is very difficult since it involves making assumptions and using historical data to make a judgment or a forecast Anglo Irish Bank It is the wish of every financial institution to greatly reduce its interest risks; therefore most banks have made monitoring of interest risk a day to day activity for the risk management teams Anglo Irish Bank Foreign Exchange Risk This is the form of risk that emerges as a result of the changes in the value of currencies.
Specific Issuer Risks This is also referred to as credit spread risk. Risk Appetite Governance Responsibilities Risk governance is a form of responsibility that starts from the top management and goes down the hierarchy of authority systematically to the lower level managers, the main participants in this process include the following HSBC , pr 8. Ways in which UK banks are strengthening risk management strategies Despite the fact that banks have tried to come up with mechanisms of risk management, there are still more initiatives being conducted to devise more effective risk management strategies and polices Bozzolan , p Source Ernst and Young Upgrading risk reporting strategies The top management, shareholders, board of governors are now receiving information about risks in the organization that is more complete, detailed and presents the actual case scenario on the ground with regard to risk, this can be considered as a step further compared to the previous forms of risk reporting Ernst and Young Developing New Technologies Most banks are still developing technology that will complement the risk management teams in the process of developing risk management policies and procedures so as to make the process of risk management in banks more efficient All business , pr Increasing Costs Caused By Risks As banks in the United Kingdom keep on enjoying market stabilization, Chief executives are experiencing an increase in the costs they incur in their quest to improve their management systems so as to survive the economic recession All business , pr Risk cost estimation is not an easy task The process of estimating the cost incurred by the bank with regard to risk management is a very complex task City University , pr However, most of the banks in the united kingdom stated that they were able to come up with an estimated figure of the costs they incurred with regard to risk management and control.
In the past two years it was hard for the banks to estimate the costs that they have incurred in risk management and control and barely half managed to produce a total figure of the estimated funds used in risk management and control Ernst and Young
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Most banks are still developing technology that will complement the risk management teams in the process of developing risk management policies and procedures so as to make the process of risk management in banks more efficient (All business , pr 10).
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