pillowcase商业银行风险管理外文及翻译

2021年1月20日发(作者：sheep是什么意思)
外文文献翻译

Commercial Bank Risk Management
: An Analysis of the Process

山东建筑大学毕业论文外文文献及翻译

外文文献：

Commercial Bank Risk Management: An Analysis of the Process
Abstract

Throughout the past year, on-site visits to financial service firms were conducted
to
review
and
evaluate
their
financial
risk
management
systems.
The
commercial
banking
analysis
covered
a
number
of
North
American
super-regionals
and
quasi±
money- center
institutions
as
well
as
several
firms
outside
the
U.S.
The
information
obtained
covered
both
the
philosophy
and
practice
of
financial
risk
management. This article outlines the results of this investigation. It reports the state
of risk management techniques in the industry. It reports the standard of practice and
evaluates
how
and
why
it
is
conducted
in
the
particular
way
chosen.
In
addition,
critiques are offered where appropriate. We discuss the problems which the industry
finds
most
difficult
to
address,
shortcomings
of
the
current
methodology
used
to
analyze
risk,
and
the
elements
that
are
missing
in
the
current
procedures
of
risk
management.





1. Introduction

The past decade has seen dramatic losses in the banking industry. Firms that had
been
performing
well
suddenly
announced
large
losses
due
to
credit
exposures
that
turned sour, interest



rate positions taken, or derivative exposures that may or may
not have been assumed to hedge balance sheet risk. In response to this, commercial
banks have almost universally embarked upon an upgrading of their risk management
and control systems.

Coincidental
to
this
activity,
and
in
part
because
of
our
recognition
of
the
industry's
vulnerability
to
financial
risk,
the
Wharton
Financial
Institutions
Center,
with
the
support
of
the
Sloan
Foundation,
has
been
involved
in
an
analysis
of
financial
risk
management
processes
in
the
financial
sector.
Through
the
past
academic
year,
on-site
visits
were
conducted
to
review
and
evaluate
the
risk
management systems and the process of risk evaluation that is in place. In the banking
sector,
system
evaluation
was
conducted
covering
many
of
North
America's
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山东建筑大学毕业论文外文文献及翻译

super-regionals
and
quasi±
money-center
commercial
banks,
as
well
as
a
number
of
major investment banking firms. These results were then presented to a much wider
array of banking firms for reaction and verification. The purpose of the present article
is to outline the findings of this investigation. It reports the state of risk management
techniques
in
the
industry
—
questions
asked,
questions
answered,
and
questions
left
unaddressed by respondents. This report can not recite a litany of the approaches used
within the industry, nor can it offer an evaluation of each and every approach. Rather,
it reports the standard of practice and evaluates how and why it is conducted in the
particular way chosen. But, even the best practice employed within the industry is not
good
enough
in
some
areas.
Accordingly,
critiques
also
will
be
offered
where
appropriate.
The
article
concludes
with
a
list
of
questions
that
are
currently
unanswered, or answered imprecisely in the current practice employed by this group
of relatively sophisticated banks.
Here,
we discuss
the problems which the industry
finds
most
difficult
to
address,
shortcomings
of
the
current
methodology
used
to
analyze
risk,
and
the
elements
that
are
missing
in
the
current
procedures
of
risk
management and risk control.





2. What type of risk is being considered?

Commercial banks are in the risk business. In the process of providing financial
services,
they
assume
various
kinds
of
financial
risks.
Over
the
last
decade
our
understanding
of
the
place
of
commercial
banks
within
the
financial
sector
has
improved
substantially.
Over
this
time,
much
has
been
written
on
the
role
of
commercial banks
in
the financial sector, both
in the academic literature
and in
the
financial
press.
These
arguments
will
be
neither
reviewed
nor
enumerated
here.
Suffice
it
to
say
that
market
participants
seek
the
services
of
these
financial
institutions
because
of
their
ability
to
provide
market
knowledge,
transaction
efficiency
and funding
capability.
In performing
these roles, they
generally
act
as a
principal in the transaction. As such, they use their own balance sheet to facilitate the
transaction and to absorb the risks associated with it.

To be sure, there are activities
performed by banking firms
which do not
have
direct
balance
sheet
implications.
These
services
include
agency
and
advisory
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山东建筑大学毕业论文外文文献及翻译

activities such as





(1) trust and investment management;





(2)
private
and
public
placements
through
``bestefforts''
or
facilitating
contracts;






(3)
standard
underwriting
through
Section
20
Subsidiaries
of
the
holding
company;






(4)
the
packaging,
securitizing,
distributing,
and
servicing
of
loans
in
the
areas of consumer and real estate debt primarily.


These items are absent from the traditional financial statement because the latter
rely on generally accepted accounting procedures rather than a true economic balance
sheet. Nonetheless,the overwhelming majority of the risks facing the banking firm are
on-balance-sheet businesses. It is in this area that the discussion of risk management
and
of
the
necessary
procedures
for
risk
management
and
control
has
centered.
Accordingly,
it
is
here
that
our
review
of
risk
management
procedures
will
concentrate.





3. What kinds of risks are being absorbed?

The risks contained in the bank's principal activities, i.e., those involving its own
balance sheet and its basic business of lending and borrowing, are not all borne by the
bank itself. In many instances the institution will eliminate or mitigate the financial
risk associated with a transaction by proper business practices; in others, it will shift
the risk to other parties through a combination of pricing and product design.

The banking industry recognizes that an institution need not engage in business
in amanner that unnecessarily imposes risk upon it; nor should it absorb risk that can
be efficiently transferred to other participants. Rather, it should only manage risks at
the firm level that are more efficiently managed there than by the market itself or by
their owners in their own portfolios. In short, it should accept only those risks that are
uniquely a part of the bank's
array of services.
Elsewhere (Oldfield
and Santomero,
1997) it has been argued that risks facing all financial institutions can be segmented
into three separable types, from a management perspective. These are:





1. risks that can be eliminated or avoided by simple business practices;
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山东建筑大学毕业论文外文文献及翻译





2. risks that can be transferred to other participants;





3. risks that must be actively managed at the firm level.

In
the
first
of
these
cases,
the
practice
of
risk
avoidance
involves
actions
to
reduce
the
chances
of
idiosyncratic
losses
from
standard
banking
activity
by
eliminating
risks
that
are
superˉuous
to
the
institution's
business
purpose.
Common
risk-avoidance
practices
here
include
at
least
three
types
of
actions.
The
standardization
of
process,
contracts,
and
procedures
to
prevent
inefficient
or
incorrect
financial
decisions
is
the first
of these. The
construction of portfolios that
benefit from diversification across borrowers and that reduce the effects
of any one
loss experience is another. The implementation of incentivecompatible contracts with
the institution's management to require that employees be held accountable is the third.
In each case, the goal is to rid the firm of risks that are not essential to the financial
service provided, or to absorb only an optimal quantity of a particular kind of risk.

There are also some risks that can be eliminated, or at least substantially reduced
through the technique of risk transfer. Markets exist for many of the risks borne by the
banking
firm.
Interest
rate
risk
can
be
transferred
by
interest
rate
products
such
as
swaps or other derivatives. Borrowing terms can be altered to effect a change in their
duration.

Finally, the bank can buy or sell financial claims to diversify or concentrate the
risks that result from servicing its client base. To the extent that the financial risks of
the assets created by the firm are understood by the market, these assets can be sold at
their fair value. Unless the institution has a comparative advantage in managing the
attendant risk and/or a desire for the embedded risk which they contain, there is no
reason for the bank to absorb such risks, rather than transfer them.

However, there are two classes of assets or activities where the risk inherent in
the
activity
must
and
should
be
absorbed
at
the
bank
level.
In
these
cases,
good
reasons
exist
for
using
firm
resources
to
manage
bank
level
risk.
The
first
of
these
includes financial assets or activities where the nature of the embedded risk may be
complex and difficult to communicate to third parties. This is the case when the bank
holds
complex
and
proprietary
assets
that
have
thin,
if
not
nonexistent,
secondary
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山东建筑大学毕业论文外文文献及翻译

markets.
Communication
in
such
cases
may
be
more
difficult
or
expensive
than
hedging the underlying risk. Moreover, revealing information about the customer may
give competitors an undue advantage. The second case includes proprietary positions
that are accepted because of their risks, and their expected return. Here, risk positions
that
are
central
to
the
bank's
business
purpose
are
absorbed
because
they
are
the
raison of the firm. Credit risk inherent in the lending activity is a clear case in point,
as is market risk for the trading desk of banks active in certain markets. In all such
circumstances, risk is absorbed and needs to be monitored and managed efficiently by
the
institution.
Only
then
will
the
firm
systematically
achieve
its
financial
performance goal.





4. How are these risks managed?

In light of the above, what are the necessary procedures that must be in place in
order
to
carry
out
adequate
risk
management?
In
essence,
what
techniques
are
employed
to
both
limit
and
manage
the
different
types
of
risk,
and
how
are
they
implemented in each area of risk control? It is to these questions that we now turn.
After reviewing the procedures employed by leading firms, an approach emerges from
an
examination
of
large-scale
risk
management
systems.
The
management
of
the
banking firm relies on a sequence of steps to implement a risk management system.
These can be seen as containing the following four parts:





1. standards and reports,




2. position limits or rules,





3. investment guidelines or strategies, and





4. incentive contracts and compensation.

In general, these tools are established to measure exposure, define procedures to
manage these exposures, limit individual positions to acceptable levels, and encourage
decision makers to manage risk in a manner that is consistent with the firm's goals and
objectives. To see how each of these four parts of basic risk-management techniques
achieves these ends, we elaborate on each part of the process below. In section 4 we
illustrate how these techniques are applied to manage each of the specific risks facing
the banking community.

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