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WHAT IS RISK MANAGEMENT? (specifically for Risk Management
students)?
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Answer Posted / mehraj wani
To understand Risk management 1st of all we must know what
is RISK. For an organisation what ever is earned less than
expected is called Risk. Risk is of various types viz,
liquidity Risk , operational risk, Credit risk, etc.
Example : If a bank is having a Fixed Deposit of Rs.
50,000 and its Maturity is for two years. say the bank
lends the same Rs. 50,000 for 3 years. At the maturity of 2
year term depost bank will face liquidity crench because of
the mismatch of two maturities (Deposit and Advance).
So, Risk Management is process minimising (mitigating)
risks by the means of effective and efficient system. In
the abopve example the effective and efficient system could
be Asset Liability Management.
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