1	RISK MANAGEMENT FRAMEWORKS IN BANKS: BANGLADESH PERSPECTIVE Presented By: Md. Raisul Islam Moinul Shahidul Haque
2	RISKS PREVAILING IN FINANCIAL SYSTEM Credit risk (including concentration risk, country risk, transfer risk, and settlement risk) Market risk (including interest rate risk, foreign exchange risk, and equity market risk) Liquidity Risk Operational Risk Other risks (Compliance, strategic, reputation and money laundering risk)
3	GUIDELINES ISSUED BY BANGLADESH BANK Risk based capital adequacy in accordance with Basel II Stress testing and Managing banking risks in six core areas: Risk Management Guideline
4	FORMATION OF RISK MANAGEMENT UNIT Banks are required to: establish an independent Risk Management Unit (RMU) RMU conducts- stress testing for examining the bank's capacity to defend future shocks and deals with all potential risks that might occur in future. prepare a risk management paper and must place in the monthly meeting of RMU Submit a risk management paper querterly within 10 days of each querter
5	ELEMENTS OF RISK MANAGEMENT SYSTEM Risk management structure with board and senior management; Developed Organizational policies, procedures and limits; Adequate risk identification, measurement, monitoring, control and management information systems; Established internal control; and Comprehensive audits to detect any deficiencies in the internal control environment in a timely fashion.
6	RISK MANAGEMENT REPORTING Quarterly Reporting- ICAAP Key figures from the credit portfolio Market risk Large exposures Industry analyses Liquidity risk Annual reporting Risk policy Risk management framework Credit portfolio quality
7	FRAMEWORK OF CAPITAL MANAGEMENT Capital Management Policies The role and responsibilities of the Board, management, and the RMU/CMU. Basic policies for maintaining sufficient capital and on the capital allocation process; Risk limits in relation to the capital; Calculation of the capital adequacy ratio in line with capital adequacy guidelines issued by Bangladesh Bank; and Methods of internal capital adequacy assessment in conducting capital allocation process; Appropriate level of capital target for the short-term, medium-term and long-term.
8	CREDIT RISK MANAGEMENT FRAMEWORK Components of a Typical Credit Risk Management Framework: Board oversight Senior management's oversight Organizational structure Systems and procedures for identification, acceptance, measurement of risks Monitoring and control of risks
9	CREDIT RISK MANAGEMENT FRAMEWORK (CONTD.) Credit Risk Management Committee Credit Risk Strategy Credit Policies Credit procedures Measuring Credit Risk Internal Credit Risk Rating Credit Risk Monitoring and Control
10	MARKET RISK MANAGEMENT Measurement of Interest Rate Risk Interest Rate Risk Management and Control Procedures Measurement of Foreign Exchange Risk Foreign Exchange Risk Management and Control Procedures
11	LIQUIDITY RISK STRATEGY Measurement of Liquidity Risk Contingency Funding Plans Maturity Ladder Liquidity Ratios and Limits Liquidity Risk Management and Control Procedures
12	OPERATIONAL RISK MANAGEMENT Categorization of Operational Risk A)Internal Fraud B) External Fraud C) Employment Practices and work Place Safety D) Clients, Products and Business Practices E)Damage For Physical Assets F) Business Disruption and System failure G) Execution, Delivery and process management
13	RISK ASSESSMENT AND QUANTIFICATION Self risk Assessment Risk Mapping Risk indicators
14	RISK MONITORING AND REPORTING The critical operational risks facing, or potentially facing, the bank; Risk events and issues together with intended remedial actions; The effectiveness of actions taken; Details of plans formulated to address any exposures where appropriate; Areas of stress where crystallization of operational risks is imminent; and The status of steps taken to address operational risk.
15	"Thank You" Thank You