Risk Management Program For The Small Community Bank

For the small community bank, every action involves an amount of risk. A risk management program, which identifies, analyzes, treats, and monitors risks, is necessary for the bank’s operations. Mitigation strategies are implemented against potential losses or a bank failure. The executive in charge of developing and integrating the program is the Chief Risk Officer (CRO). The risk management program for the community bank addresses ten risks associated with Enterprise Risk Management (ERM) or traditional risk management processes, while attaining risk management goals. Risks and Processes A community bank is exposed to different types of risks. Hazard or pure risks may or may not result in loss and are, generally, insured, whereas, financial risks are external threats with the potential to affect the bank’s objectives. For the CRO, managing various types of risks is essential for the overall profitability of the bank. To minimize the effect of hazard and financial risks, the CRO will implement ERM or traditional risk management processes to create a program for risk management. ERM The ERM process applies to hazard, operational, financial and strategic risks throughout the community bank. The model involves five steps: scan environment, identify risks, analyze risks, treat risks, and monitor and assure. As CRO, he/she communicates and coordinates the risk management program to all thirty employees, establishing a holistic approach. Using the ERM process, fiveShow MoreRelatedRisk Management Program For A Small Community Bank1012 Words   |  5 PagesRisk Management Program A risk management program provides the framework for an organization to assess the risks that the company faces. As a Chief Risk Officer (CRO) for a small community bank with one location, employing 30 people either in full-time or part-time positions, it is important to develop a complete, thorough risk management program for the bank. A thorough program involves planning, organizing, leading and controlling the resources of the bank in order to achieve the organization’sRead MoreThe Objectives Of Senior Management1568 Words   |  7 PagesThis is a type of risk that the CRO must assess within the goals of business continuity. The objective of senior management is to be continuing operations as normal and business interruption risks affect the ability of the organization to continue operations normally. The CRO should identify the activities or accidents that would possibly interrupt business, determine the resources available internally to deal with the loss, and ensur e that any resources identified would be available to assistRead MoreRisk Management For The Community Bank843 Words   |  4 PagesFor the community bank, goals are incorporated into the risk management program established by the CRO and management. To ensure the bank serves the local community, the identification and management of risks and loss exposures, in addition to, policies and procedures enable the institution to thrive. Tolerable uncertainty, legal and regulatory compliance, economy of operations, social responsibility are pre-loss goals, whereas, survival, business continuity, profitability and growth, and earningsRead MoreRisk Management Program For A Financial Institution . As1220 Words   |  5 PagesRisk Management Program for a Financial Institution As time has shown, financial institutions undertake an abundance of uncertainty causing unpredictable risk consequences. As a result, executives instill risk management programs to assist in managing the organizations risks so they align with the company’s goals. Commonly sought goals include legal and regulatory compliance, tolerable uncertainty, survival, business continuity, earnings stability, profitability and growth, social responsibilityRead MoreRisk Management Portfolio Project. The Chief Risk Officer1356 Words   |  6 PagesRisk Management Portfolio Project The chief risk officer for a small community bank must look at operational, financial and strategic risk. They must also be aware of both traditional risk management, as well as financial enterprise risk management. Operational risk is a type of risk that would involve the people, the processes the systems and external events that could take place. Historically operational risks are managed by front end managers were due to larger losses taking place in recentRead MoreEnterprise Wide Risk Management Framework And Process Essay1602 Words   |  7 PagesEnterprise-Wide Risk Management In order to effectively treat risk, firms must first apply a risk management framework and process. The enterprise-wide risk management process provides a broad approach to address and manage all of an organizations risk. Furthermore, this technique is comprised of four components, lead and establish accountability, align and integrate, allocate resources, and communicate and report. When implemented together these components are the essential to achieving an organizationsRead MoreCase Study : Chase Co Essay950 Words   |  4 Pages JPMorgan Chase Co. origins back to 1799 when it was firstly chartered in New York City. JPMorgan Chase Co. today encompasses more than 1,200 banks and credit institutions. As global economy leader, it’s most important firms — J.P. Morgan, Chase Manhattan, Chemical, Bank One, First Chicago, and National Bank of Detroit gave a solid contribution to the finance innovation and the growth of the United States and the rest of the world . Clients and Consumer JPMorgan Chase Co. is a financialRead MoreBank of America Case Study1472 Words   |  6 PagesExecutive Summary Bank of America Bank of America Corp. Group Members: Mary Bruton Shawn Harsaran Carlos Leal Tom Egurrola Jennifer Stanis Broward College MAN4720 September 09, 2013 Professor James Popino According to Bank of America, they’re focusing on creating real, meaningful connections with individuals, businesses and communities to help them connect with what matters most. Bank of America is proud to partner with 57 million customers, bringingRead MoreThe Demand And Dominance Of Consumer Lending905 Words   |  4 Pagesloan a bank can make. However, Functional Cost Analysis (FCA) program conducted by the Federal Reserve found that consumer loans are among the most risky and costly loanable funds that bank grants to their customer. Recovering a loan is dependent upon the consumer’s economic state, heath state, and many times moral character. Consumer loans are also said to be cyclical with the overall state of the economy. With this uncertainty surrounding consumer lending, it poses a challenge for banks to predictRead MoreThe Community Financial : Investing1089 Words   |  5 PagesFrist Community Financial: Investing in Their Employee’s In the case study written by Marcus Osborn, Kutak Rock LLP the author writes about a financial company called Frist Community Financial. First community financial gives loans to small businesses in the forms of asset-based and factoring loans. They will loan up to $1 million to a small business. These loans are considered high risk, traditional lending firms tend to stay away from small business loans. The relationship between First Community