Risk Management In Banking: A Process And Analysis Interest Rate Management

Abstract

The Asian financial crisis is yet to run its full course, but is already one of the largest crises in the post-war era. It severely affected the performance of the region and created an economic downturn that impacted on financial institutions worldwide. At the same rime, the failure of Russia country to deal with its deterio,-ating conditions led some hedge funds and leading international banks to announce substantial losses. Moreover, these events occurred at a time when financial markets were still trying to cope with the contagion effects that shook the economies of America Countries. On-site visits to financial service firms were conducted to review and evaluate their financial risk management systems. The banking analysis covered center institutions as well as several firms outside in a country. The information obtained covered both the philosophy and practice of financial risk management. This paper outlines the results of the process and analysis through investigation of interest rate management. 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.