Risk-Oriented Management in the Bank

Abstract

Risk-oriented management is defined as the scientific and methodological concept of banking management, aimed at identifying and assessing the totality of bank risks through special techniques and methods in order to create conditions for reliable and stable functioning of the bank, maximizing its own capital, meeting the needs of clients and partners of the bank, ensuring profitability of banking activity. The introduction of new principles for building a risk management system aims at increasing the level of corporate governance in banks, strengthening and more detailed requirements for the risk management process, strengthening the responsibility of the bank's management bodies for the risks taken and the financial stability of the bank. Creating an effective risk culture requires Boards and senior management to focus on the bank's written rules that clearly define risk management objectives and priorities and by taking a hard, honest look at any informal rules, protocols, the way workflows are performed, how decisions are made, and the link to the bank's compensation practices. The risk management system in the bank covers all its structural levels-from the top management of the bank (board and board) to the level at which the risk is directly taken or generated. A feature of the risk-oriented management of the bank is the creation of three lines of protection against risks. The degree of complexity of the banking risk management system should correspond to the degree of riskiness of the environment in which the bank operates. The policy on operational risk management also involves the development of technological schemes (maps) of products and services of the bank, which are maintained in a constantly updated state. Accordingly, the requirements for management of the main types of bank risks are defined. Improving banking risk management systems requires a transitional period for the implementation of specific requirements, as well as the need for additional staff costs and IT technology.

The improved “four- line model” of the organization of the risk management system in banks and banking groups of Ukraine

“…Положення встановлює основні цілі та принципи управління ризиками, визначає суб'єкти СУР, її ієрархічну структуру та функції на основі моделі «трьох ліній захисту» або «3LOD» -від «3 Lines of Defense». У цій моделі всі співробітники відповідальні за управління ризиками та середовище ризик-орієнтованого управління в банку відповідно до своєї ролі в одній із трьох «ліній захисту» [2]. Також визнається, що зовнішні аудитори та органи регулювання відіграють важливу роль у структуруванні управління ризиками та внутрішнього контролю.…”

Introduction of NSFR Ratio in the Activities of Commercial Banks in Ukraine

“…The same remarks, but from the standpoint of a critical review of all liquidity ratios, are expressed in studies of general approaches to the formation of corporate liquidity, including banks [6,21,24]. In this aspect, it should also be noted that research aimed at defining the essence of bank liquidity as an element of ensuring their financial stability in times of crisis, which are reflected in the methodological approaches to liquidity recommended by the Basel Committee [17,18].…”