Corporate Risk Management

Corporate Risk Management

Introduction4

Risk Management4

Enterprise Risk Management4

Enterprise Risk management in financial institutions5

Purpose of the study5

Report structure5

Expected conclusion6

Literature review6

Evolution of ERM6

Significance of ERM Framework7

Conceptual framework for ERM8

Critical evaluation9

Development of the Framework: Enterprise Risk Management at Credit Suisse10

Description of the case study10

Comprehensive framework for enterprise risk management11

Credit risk11

Market Risk12

Asset and liability risk12

Banking book risk13

Non-counter party related risk13

Operational risk14

Critical evaluation of the practical framework, Pillar III application14

Comparison of practical and theoretical framework as per Pillar III15

Analysis and interpretation16

The Risk measurement16

Data16

Analysis17

Risk modeling; Credit Suisse and Market risk18

Equity market risk19

Interest rate risk19

Currency risk19

Commodity risk20

Conclusion20

Achievement of research objectives20

New issues20

Utilization of results21

Weaknesses21

Further research22

References23

Appendices25

Corporate Risk Management

Introduction

Risk Management

The phenomenon of risk management is based upon the procedure of identification, identification, assessment, analysis, as well as, decision making regarding the most profitable use of funds. It is defined as “it is the area of financial management that functions for identification, quantification, as well as, management of uncertain outcomes related to an investment”. Today, businesses operate under huge pressure and develop serious risks and threats through their normal functioning. The external environment for businesses is extremely dynamic.

Enterprise Risk Management

Enterprise risk management is the field that pertains to the assessment and management of risk associated with the functioning of a business organization. The field is a new domain introduced under risk management to assess, identify, quantify, as well as, handle risk through a business situation in the most effective manner. It is defined as “the process of planning, organizing, leading and controlling organizational activities in such a manner, that is minimizes the capital and earnings pertaining to the organization”

It is one of the recently emerged fields under risk management area implying that the management of internal and external risk mechanics being handled in a particular manner. It could be further elaborated as “the management premise that is affected by board of directors, organizational management and human capital to formulate strategy for the business organization, as well as, identify uncertainties pertaining to the organization and channelize the management process to enable the organization manages within the risk appetite” (S&P, 2005, pp. 20-24).

Enterprise Risk management in financial institutions

For every business, the field has a major role in the dynamic corporate environment of today. The purpose of management of unfavorable outcomes is to assure the survival and profitability of the business. However, the idea behind enterprise risk management serves an extra mile considering the job and business of financial institutions, . They manage the flow of funds to and from the public, and therefore, end up having an enormous amount of risk to manage. The competitiveness of financial institution lies within ability to mitigate the risk and earn higher returns on a given amount of capital.

Purpose of the study

The purpose of the study is to assess enterprise risk management in Credit Suisse being a renowned financial institution. It is the market leader in financial services all across the globe, and therefore, it deals with the most extensive risk management in the context of ...