Management of risk is a key component of banking, and is now under significantly more regulatory scrutiny. While it might be a desire to have little or no risk, it is impossible to eliminate risk and maintain performance and build shareholder value. The key is to (1) manage risk appropriately, (2) ensure that profit is generated that is commensurate with that risk, and finally, (3) ensure that capital is adequate to support the level of risk at your bank. In the opinion of Young & Associates, the risks to understand are:
Each of these risks, though separate and distinct, should be measured and viewed as interrelated to the overall risk. Young & Associates, Inc. has been working with banks for many years to analyze the level of risk at your bank and then to develop the appropriate strategies to effectively manage risk and determine capital adequacy.