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Financial Innovation & Risk Management of Goldman Sachs - Essay Example
Author : stantonclay
Finance & Accounting
Pages 13 (3263 words)
The focus in this paper is on Goldman Sachs as one of the largest bank holding companies in the United States. It is majorly known for its strong investment in the bank's division and is widely acknowledged for its outstanding risk management strategies. …
The paper tells that over the recent years, commercial banks in the banking industry have recorded dramatic losses because of risks it faces due to global crisis. This is because, in the financial perspective, risk is assessed as the tendency whereby the actual return does not match with the expected return. As a commercial bank, Goldman Sachs faces market risk, financial risk and operation risk that arise from either external or internal activities. With banks facing a crisis as a result, of risks that arise from credit exposure and interest rate position among other risks they have resolved to upgrade the risk management strategies and theories they use. Goldman Sachs is one of the banks using risk management strategies that either eliminates or mitigates some risks. In other instances, Goldman Sachs management decides to shift the risks to other parties. The risk management strategies comprise of liquidity risk management, operations risk management, credit risk management and market risk management that has over the years, seen the bank remain stable during both the financial and economic crisis. More significantly, banks carry out risky business, as it provides financial services to its clients. In the banking industry, Goldman Sachs is well known as the leading securities and global investment-banking firm. It has three main business lines that it operates comprising of investment banking, asset management and securities services and trading and principal investments. ...