Risk Management Procedure in Financial Institutions of Bangladesh

Abstract

This paper has looked into the risk management procedure of financial institutions. Most of the financial institutions face different type of risks such as market risk, interest rate risk, credit risk, foreign exchange risk, liquidity risk, insolvency risk which have been measure by the liquidity and liability management, capital adequacy management, product and geographic expansion management etc. the study found that every financial sector in Bangladesh at least more than 45% risk in investment and profitability is being increase in long term investment. The strong capital adequacy, liquidity and liability management, product and geographic expansion management helps to take risks and make profit. This report involves examining a number of financial institutions in Bangladesh, including their background, area of operation, and risk management. After investigating and gathering information about the general or common risk management procedure, this report also takes into account three test cases by picking up randomly 3 of the most renowned firms in Bangladesh. Then they are evaluated in terms of the international standard. A recommendation to improve their performance is also given at the last section of the report.