Risk management is a discipline at the core of every financial institution which encompasses all the activities that affect its risk profile. It involves identification, measurement, monitoring and controlling risks to ensure proper management of risks related to bank business. The objective of risk management is to identify and analyze risks and manage their consequences. Perhaps the banking sector has the most specific focus on the management of financial risks.
Bangladesh Bank advised the banking industry to identify the risk factors associated with their business and to take effective measures in the functional process to minimize and control the risks in the area of lending, internal control, liquidity and treasury management. Introduction of risk analysis culture, loan classification and ratings are the broad schemes for assessing the risk status of banking assets. Janata Bank Ltd has compiled different Risk Manuals and several Instruction Circulars have been issued to handle the issue of risk management. Besides, Risk Management Policy has already been formed and is being updated from time to time. There are the mandatory Six Core Risk Guidelines with which all are already familiar.
The bank has already implemented the risk management guidelines which cover the following areas:
- Credit Risk
- Internal Control & Compliance Risk
- Asset & Liability Management Risk
- Foreign Exchange Risk
- Money Laundering Risk
- Information and Communication Technology Risk and
- Environmental Risk Management
Among the above mentioned Risks first sixes are called Core Risks.