Risk Management in Banking: Towards A New Model

857
DOI: 10.20542/0131-2227-2017-61-1-78-87

N. Rozanova (nrozanova@hse.ru),
National Research University Higher School of Economics, 31, Shabolovka Str., Moscow, 119049, Russian Federation

Abstract. The article deals with risk management, risk culture, business-models and their trends in modern banking that have been evident after the global financial crisis of 2007–2009. The vast experiences and deep investigations in the roots of banking risks and banks’ behavior patterns are provided on the basis of thorough analysis in the sphere of the world economic literature. The specificity of credit institution business leads banks to high risk exposure, usually systemic one; the banking crises being good examples. The latest global financial and economic crisis of 2007–2009 showed weak aspects both in banking regulation and monitoring and in banking management itself. Risk transformation and risk management are the key functions of banking management in general. The more precise the risk estimation is, the more adequate decision the bank managers take, the more efficient banking management would be and the less is the possibility of the bank’s bankruptcy. The world experience has clearly demonstrated that the leading global banks have been discovering, step by step, an adequate answer to contemporary challenges in risk business environment. A brand-new business model of banking risk management would soon arise with the possible following features: a wise balance between stability, profitability and flexibility; more conservative business operations; clear transparency and simplification in inner structure. In this model the crucial role would be given to risk-managers, whose position within banks would transform from simple tool-makers into valuable and authoritative decision-makers. These trends signify that the world banking is at the edge of new understanding and new implementation of risk culture as a fundamental driver of its business. This lesson should also be learnt by Russian banking organizations.

Keywords: risk management, business model, banks, competition, market structures, risk culture 


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For citation:
Rozanova N. Risk Management in Banking: Towards A New Model. World Eonomy and International Relations, 2017, vol. 61, no. 1, pp. 78-87. https://doi.org/10.20542/0131-2227-2017-61-1-78-87



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