IndexThe concept of risk and credit risk managementRisk managementRisk identificationRisk measurementRisk analysis or assessmentRisk controlRisk monitoringThis chapter is dedicated to a broad explanation of the theoretical framework/the evaluated and advanced literature so that we can to provide in-depth information and deep expertise in this work. It starts with an evaluation of the credit risk management concept. Well-known RM ideas or practices are then analyzed. We continue with the theoretical literature to expose that, despite the fact that risk and value/return are related, banks still try to control it allowing them to achieve their objectives. It facilitates the identification and production of a rationalization of approximately existing thoughts on the thesis topic and concepts that are relevant to colleagues if they are coherent or have implications on the area of ​​study. It also allows the reader to identify/use information about existing ideas on the topic, relevant principles and theories and especially whether there are consistencies or implications in the area of ​​study. Say no to plagiarism. Get a tailor-made essay on "Why Violent Video Games Shouldn't Be Banned"? Get an Original Essay The Concept of Risk Management and Credit Risk Risk Management Management in its best understood definition can be defined as the act of planning, directing, controlling, monitoring and trying to achieve favorable results. Or it is clearly the act, manner, or practice of manipulation; manipulation, supervision or control. Risk, on the other hand, can be described as the possibility that something unpleasant or dangerous will happen. When agencies go into business, it is obvious that they will be exposed to some type of risk or any other which in most cases is an uncertainty despite the fact that sometimes one can be certain that it will occur. Banks are one of those agencies whose risk is very positive because they do not appear isolated, given the dynamic environment in which they operate, the volatility of the FMs in which they participate, the diversification and the aggressive environment in which they are placed. Even if it is certain that the risk will occur, in most cases it is not always possible to eliminate, reduce or improve it. So, the pleasant opportunity for companies is to try to control the threat so as to reduce the possibility of prevalence or reduce its consequences. These opportunities can range from “doing nothing at all” to attempting to nullify the effect of any diagnosed hazard. But, due to the nature of banking, a financial institution cannot put itself in the position of doing nothing or reversing the threat. So, all he does is stay with it but look for a way to control it. Given the riskiness of its activities, a bank does not wait to introduce risk management at a certain level of its activities, but does it from the beginning? This is because its activities are so interrelated such that if not well managed, the impact/consequences can be linked and could even cause failure. In order for this goal to be achieved, selection managers want to start with discovering the case involved, measuring its intensity, determining it, screening it and then looking for measures on how to manage it. This act of risk management is called RM. RM is “a direction of action planned to reduce the risk of an event recurring and/or to diminish or incorporate consequential effects should that event occur.” This connected movement pathway gives rise to a RM process that involved a few phases. RM is a lotessential and constitutes an important part of the sport of any organization because its main objective is to help all other managerial sports to achieve the objectives of the organization immediately and correctly since it is a continuous techniquethat depends at the same time on changes in the internal and external environment of the organization. Looking at the process in stages, this suggests that before risk can be managed, it must be identified. Once the risk is identified, measures are taken to reduce its intensity or to evaluate the outcome of the hazard, the evaluation of the results is being completed, manipulative measures are introduced in the region to avoid or reduce its intensity, and then the top monitoring is underway to verify whether the expected results are the desired ones. MRI risk identification cannot be performed while the risk was not initially identified. In this method, if no hazard is identified, there may be no need for risk management. This identification is done through the use of different strategies that rely on the company in question to predict all varieties of threats it may be confronted with both in the present and in the future. Therefore, threat identity is the main phase of the RM method that develops the premises for the subsequent phases. If success is not achieved at this level, the risk may be unmanageable. This way the company will no longer respond to the threat or take any action associated with it and the consequences could be very unexpected. This way you need to identify the dangers associated with gains and losses. The inability to become aware of the risk is as inappropriate as to discover the other. Risk identity, therefore, involves a comprehensive assessment of all present and future risks within the operations of the business enterprise, asset management and driving services. During the random identity procedure, the bank is ready to observe its sports and places where its assets are exposed to risks. This will especially help him as he has a future task, in terms of developing and implementing new risk control programs. Although all banks are aware that they face the same type of risks, the hazard identification techniques for each of them may be different. It is always crucial for managers to discover all possible dangers they may encounter because any unnoticed risk can have very negative effects on the entire system. Given the importance of hazard identity within the risk management process, managers should not focus their attention on what can be insured or mitigated, but should begin with the following questions posed by usage. How can organizational sources be threatened? What can the negative impact prevent the company from achieving its objectives? What favorable opportunity could this prove to be? Starting the identity now will give a great start to the implementation and no limitations on the type of risks to be identified. Risk MeasurementRisk measurement is available after the identification phase to provide expertise on the nature and level/extent of the hazard so that it can be precisely controlled. This is because, without risk dimensions, the depth of impact or effects that may result from the diagnosed risk if neglected cannot be analysed. A good risk dimension will decide the threat management strategies that need to be put in place to handle such a possibility. This will go hand in hand to bring out the quantity and value related to the possibility thatshould it occur and the agency in question will then use the known consequences to see how much price is at stake or how much value is associated. Good risk measurement and understanding is therefore important for the bank so that it will not be able to make a better risk decision significantly, but will also drastically improve its performance in order to improve accurately and profitably. This will also help determine how much effort needs to be made nearby or the degree of seriousness about how to manipulate the threat. For aggressive and regulatory reasons, it is very important for all banks to have a solid framework for the risk dimension. The risk dimension, posed sincerely, is the evaluation of the final results of the case using a series of danger elements that can be determined and measured. A threat is something that is likely to increase the chances of a specific occasion occurring. Different techniques are used to measure the different forms of risk, from traditional to sophisticated ones. Some include Value at Risk (VAR), period analysis, sensitivity analysis, pressure testing and scenario analysis. Although all banks may face the same type of danger, each may also use different strategies based on their personal choices. Risk Analysis or Assessment The risk assessment undertaking involves understanding what is at risk and what events are likely to cause harm or benefit. Risk is assessed in terms of severity of impact, probability of occurrence and controllability. Once done, it helps the financial institution to recognize the chances of the threat occurring, if it occurs, the impact it can have on the financial institution and how it can be manipulated. Risk assessment is done by prioritizing the hazard using hazard assessment or risk assessment. This hazard analysis is based entirely on chance and results. The probability depends on how likely the hazard is to occur and how often it will occur. While the consequences on the alternative side can be measured by looking at the results on the outcomes or the factors that determine the consequences. Knowing how often the threat occurs, and the effect it will have if it occurs, provides the financial institution with the basis for knowing how vital the threat is. The risk assessment is then carried out whilst a good hazard assessment has been undertaken. A rating is obtained against an appropriate criterion of reputation and opportunity to offer a rating. For example:Low (tolerable)Medium (low as practical enough)High (intolerable)the above classification therefore determines the decision or point of view of the financial institution, but what should be stated if a decision depends on each bank in independently.Risk ControlRisk manipulation involves the use of physical measures, techniques, tools and/or personnel training to avoid, reduce, prevent or eliminate the perceived threat/its monetary consequences and other undesirable outcomes of hazards. Naturally, risk cannot be avoided or eliminated so the only alternative is to manage it. Banks, like other groups, have exceptional ways of dealing with dangers, and the amount of risk each is willing to accept is different. Some will decide whether to avoid the danger or allow it to happen and then begin to look for measures to deal with it, even as others will decide whether to change it or insure it. There will also be a large gap between the extent of vital manipulation and the extent of management practiced. Risk tolerance is another area where banks can vary;.