Risk Management Practices of Dhaka Bank PLC

Abstract

This extensive study analyzes the risk management strategies utilized by Dhaka Bank PLC, a prominent commercial bank in Bangladesh. In a complex and turbulent financial landscape, effective risk management is essential for commercial banks to sustain financial stability, safeguard shareholder value, and uphold regulatory compliance.

This study examines how Dhaka Bank detects, quantifies, oversees, and alleviates many types of risks, including credit, market, liquidity, operational, and compliance risks. The analysis indicates that Dhaka Bank has implemented a strong risk management system in accordance with Basel II and Basel III standards, as well as Bangladesh Bank rules. The analysis of five years of financial data (2019-2023) reveals that the bank has effectively decreased its non-performing loan ratio from 4.8% to 3.2%, sustained a capital adequacy ratio significantly above the regulatory minimum of 10%, and enhanced its liquidity coverage ratio to comply with international standards.

The bank utilizes advanced risk assessment methods, sustains diversified loan portfolios, and has established thorough internal control systems to reduce operational risks. The report finds areas for improvement, including the necessity for sophisticated predictive analytics, enhanced cybersecurity infrastructure, and superior stress testing capabilities.

Hence, the findings indicate that although Dhaka Bank's risk management systems are fundamentally robust, ongoing adaptation to emerging risks and technology advancements is crucial for maintaining competitiveness and stability in the evolving banking market.