Economic Decision-Making and Risk Management

Abstract

Because of the recent financial crisis in the United States that shook the financial sector, the need for adopting effective Risk Management practices has increased. Essentially, the volatility of the sector calls for an augmented re-evaluation of the framework, as well as the components of uncertainty management practices by commercial banks, regulatory agencies, and scholars. By doing so, the stakeholders in the financial sector would ensure the conformity to the best practices. To further fortify this, the research herein uses the Ames National Corporation (ANC), which is a commercial Bank in Iowa, USA, as a case study. The institution risk profile and risk management practices are evaluated to give insights on conforming to the best international practices. The research also seeks to establish whether effective risk management results in enhanced performance and profitability for financial institutions.Stating areas on which further research should be conducted is how the study is concluded.

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“…Melakukan penilaian risiko secara teratur dapat membantu organisasi mengidentifikasi dan memprioritaskan risiko, sehingga memungkinkan mereka untuk mengalokasikan sumber daya secara lebih efektif (Haq et al, 2021). Memastikan kepatuhan terhadap peraturan dan standar industri yang relevan dapat membantu organisasi memitigasi risiko hukum dan reputasi (Galli, 2021). Strategi-strategi ini dapat disesuaikan dengan kebutuhan dan konteks spesifik masing-masing organisasi, dengan mempertimbangkan faktor-faktor seperti industri, ukuran, dan lokasi geografis.…”

“…Strategi-strategi ini dapat disesuaikan dengan kebutuhan dan konteks spesifik masing-masing organisasi, dengan mempertimbangkan faktor-faktor seperti industri, ukuran, dan lokasi geografis. Dengan mengadopsi kombinasi dari strategi-strategi ini, organisasi dapat mengelola risiko kompleks yang mereka hadapi di lingkungan global yang tidak menentu saat ini dengan lebih baik (Galli, 2021;Giuffrida et al, 2021;Ma'ady et al, 2022;Sipayung, 2023).…”

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“…This also encompasses a change in the expectations of the stakeholders that can impact the ability of the company to achieve their all-strategic objectives. This is also revealed by Galli (2021): the expansion of the ERM includes the ESG risk to help make connections to risk, strategy, and decision making, which makes companies increasingly resilient and competitive (Dang and Nguyen 2021).…”