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Provide a critical review of the current risk management activities of any one (large, international) financial institution of y - Essay Example

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Provide a critical review of the current risk management activities of any one (large, international) financial institution of y

The services of Bank of America are accessed by majority of the US population and also holds considerable market share in the financial markets in different countries. Bank of America is also a popular name in the investment banking services provided to the customers in the finance industry. The growth of the financial services have been largely due to the effective strategies of the bank in investing its funds in the areas that have higher probability of generating returns at the cost of incurred risk. Bank of America provides a wide range of banking and non-banking financial services to its customers in several markets all over the world. The customers of the banks includes the corporate houses, individuals and even the government as they need financial management for managing their wealth as well as their investments. In the initial stages of the year 2012, Bank of America was able to expand their business in the US economy with the spurt in consumer expenditure and business investments. However, the investment banking and the wealth management operation of bank of America slowed down due to the end of tax incentives offered to the business as policies of the government. In such a scenario of slowdown in the business in vestments and the crunch of liquidity in the economy, the sustenance of the banking and financial services in almost the scale of growth as achieved earlier was subject to risk. Due to the global financial recession, the European markers of Bank of America slowed down in the face of decreasing demand followed by the decline of consumption expenditure and business investment. In order to manage the risks associated to the business of banking and financial services in the face of economic slowdown, Bank of America have taken active measures to restrict the losses due to funding and liquidity risk, credit risk, foreign exchange risk, interest rate risk, etc. The risk management practices have helped Bank of America to be resilient to the shock of economic recession in US and also provide best financial services solution to all of their customers. Discussion The appropriateness of their definition of risk appetite The risk appetite of Bank of America has been defined according to the prevailing economic conditions in the several markets in which the bank operates. The global financial turmoil and the varying performances of US, European and Asian markets have led the bank of America to define upper and lower limits of risk appetite. The range of risk appetite has enabled the organization to decide on the extent of risk to be undertaken in funding and liquidity arrangement, credit offered to their global customers and the uncertainties in the fluctuation of interest rate and foreign currencies (Handlechner, 2008, p.84). The definition of risk appetite of the organization also looks at the return on investments and the return on equity of the organizations. A review of the empirical literature shows that the risk-return trade off has been increasingly important for the organization in the financial markets. The higher risk level associated to the investment of funds of the financial service ...Show more

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Provide a critical review of the current risk management activities of any one (large, international) financial institution of your choice Contents Contents 2 Introduction: Bank of America 3 Discussion 4 The appropriateness of their definition of risk appetite 4 Risk Appetite 6 Risk Appetite 7 The effectiveness of their Enterprise Risk Management Framework 11 Whether their corporate governance arrangements support their risk management activities 13 Conclusion 15 References 17 Introduction: Bank of America Bank of America is the second largest bank in United States and is rated among the top the four banks of US…
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Provide a critical review of the current risk management activities of any one (large, international) financial institution of y essay example
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