The document discusses various banking risks, including people, financial, and operational risks, emphasizing the potential threats posed by employees, debtors, and creditors. It highlights the importance of risk mitigation strategies like proper record and credit management, insurance policies, and due diligence. Additionally, it outlines emerging risks in the banking industry and the need for banks, notably Bank of America, to understand and manage these risks effectively.

1. Running head: BANKING RISKS
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BANKING RISKS
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Bank Risk
Notes from the teacher:
The project is a good start, but for full credit you will need to
identify an organization and provide deeper details on that
organization. Also, I have a few thoughts as you progress
deeper into the weeks:
-Recommend you combined module 1 and 2 together - keep
adding each week to the prior. Once you have it threaded
together, concentrate on transitions and good visual aspects
such as headers and various fonts and mediums.
-Consider using bullets to list several ideas

2. People risks
There are huge risks that are experienced when a company is
dealing with money. People risks associated with a bank are
numerous. Banks deal with people including employees,
creditors, debtors and others. Employees can be a source of
great risks especially when they expose confidential information
to the public. The information can be accessed by criminals who
can cause a great loss in regards to the company’s information
and money. Debtors are people who can result in great risks
when they fail to repay their debts together with interests, and
this affects the existence of the bank. Creditors affect the bank
when they withdraw their money at once to go to other banks or
use their money. This situation causes a company to have less
amount of money to lend, and this can affect the bank's
existence. The managers of a bank can also put a bank in risks
by making wrong decisions by doing things that put the bank's
existence in jeopardy
Financial risks
There are different types of financial risks that faced by banks.
One risk involves the bank paying its creditors. Banks usually
use the money of clients who deposit their money in bank
accounts to lend to borrowers. Banks create money by charging
interest on loans and therefore return their clients’ money and
also pays a small percentage of interest. When creditors
withdraw their money at one time, the bank lacks money to
lend, and this increases the risk to a bank as it can become
bankrupt (Fight, 2014).
The other risk is recovering money from debtors. Banks get
funds from the interest that they charge for loans and when
debtors fail to pay the bank can be in trouble since it needs the
money to pay creditors as well as get its operating cash. Errors
that are caused by people and machines can be a source of great
risks as the bank can lose money.
Operational risks
Operational risks are termed as risks of losses that may result

3. from the processes that are inadequate or that have failed.
Additionally, these risks may be attributed to people, external
events, and systems. The operational risks that might be
associated with the Bank of America may emanate from the
installation of new systems of banking that have not yet been
tested. Operational risks may also result from the failure of the
management to take seriously the recommendations that have
been made regarding the improvement of operations within the
bank. The failure of people to exercise responsibility in their
behavior as well as exercising high levels of professionalism is
one of the major ways that may trigger the emergence of the
operational risks because the processes within will not be
running the way they are expected to operate. Ethical values and
integrity have to be upheld at all time to ensure that there is
smooth running of all processes within the bank.
Risk mitigation
Mitigation of the risks is finding strategies that will prevent the
emergence of these risks as well as the way to address them if
they happen. Proper record management is one of the ways that
can be applied in risks management to help in ensuring that
records are kept well for references especially in handling
matters to do with finances. Credit management is another
approach applied in risk management since it assists in keeping
a trail of the credit advanced to the customers of the bank.
Healthy credit management is likely to enhance the success of
the bank. Insurance policies for the bank are one of the ways
applied to mitigate the risks. Insurance also makes sure that
when these risks occur and cause loss, the bank is compensated.
Due diligence is applied as a mitigation strategy of researching
on the ways to improve the performance and understanding the
risks that may come along the way (Information Resources
Management Association, 2015).
References
Fight, A. (2014). Understanding international bank risk.
Chichester, West Sussex, England: John Wiley & Sons.

4. Information Resources Management Association. (2015).
Banking, finance, and accounting: Concepts, methodologies,
tools, and applications.
Running head: BANK RISK TYPES AND TRENDS
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BANK RISK TYPES AND TRENDS
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Bank Risk Types and Trends
Notes from teacher: Great job addressing each area and look
forward working with you on developing the ideas. As you
build the project, consider adding to each section and
submitting it in its entirety, making it easier to accommodate
feedback and constantly sharpen your thoughts

5. Introduction
The banking risk is exposure that might result to uncertainty of
the outcome. There are various risk types that are categorized
based on different aspects such as the causes and the area
affected. These types are operational risk, credit risk, sovereign
risk, trade risk, foreign exchange risk, and interest rate risk.
Risk trends are various changes that occur in these types of
risks and they are most influenced by the changes in the
economy among other factors. Risk mitigation. Credit risk is the
exposure that the creditors bear when lend money to
individuals. Lending practices vary among lending institutions
change and are influenced by various factors. Capitalization
refers to when the cost of acquisition of the assets are expensed
over the period over life of the asset instead of the period it was
incurred. Solvency is the ability of a firm to meet long term
financial obligations.
Bank of America is a multinational bank that has its
headquarters in the United States. This bank offers banking and
financial services and has its headquarters in Charlotte in North
Carolina. The bank offers its products also services through
5100 bank centers as well as 16300 ATMs, online, mobile
banking platforms as well as call centers. The company offers
products such as consumer banking, finance, and insurance,
mortgage loans, private equity, investment banking, corporate
banking, wealth management, private banking as well as credit
cards. The aim of this paper is to create a risk management plan
for the Bank of America.
There are strategic, operational, finance as well as compliance
risks that are associated with the Bank of America as well as the
banking industry in general. Banks are faced with various types
of risks in the process of their operation. The risks include
credit risk, market risk, operational risks, liquidity risks
business risk, reputational risks and many others (James, 2012).
The banking industry has encountered some risks that have
emerged in the recent times that were not considered as

6. important previously. Regulators demand that banks understand
these risks to ensure that solutions are obtained to help in
managing these risks. Some of the key emerging risks include
corporate governance risks, quality of assets, dangers of gearing
and over-leverage, risks of inadequate risk transfer and many
other trending risks.
According to a recent report is that banks have continued to
ease their lending standards as well as terms in the past three
months which have increased their risks. Banks have not altered
the lending standards for home equity lines of credit in
accordance to what the FED recommended.
Credit is the likelihood that a loan borrower from a bank will
not meet their obligations to the bank or will not repay the loan
at the required time. This risk is very common, and it requires
mitigation by ensuring that the risks are covered by insurance
company. Capitalization and solvency are essential to banks.
Capitalization indicates that the amount of capital it holds a
solvency shows the whether the bank can meet its long-term
liabilities.
References
James, M. J. (2012). The story of Bank of America: Biography
of a bank. Washington, D.C: Beard Books.