Running head: BANK OF AMERICA 1 BANK OF AMERICA 4 Bank of America **notes from the teacher: Thanks for the submission and glad to see you attach each module making it a working/living document.  As the final weeks progress, consider adding a table of contents/executive summary and visuals that could add value for the reader. 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 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 wh ...

1. Running head: BANK OF AMERICA 1
BANK OF AMERICA 4
Bank of America
**notes from the teacher: Thanks for the submission and glad to
see you attach each module making it a working/living
document.
As the final weeks progress, consider adding a table of
contents/executive summary and visuals that could add
value for the reader.
Introduction
The banking risk is exposure that might result to uncertainty of
the outcome. There are various risk types that are categorized

2. 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
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

3. 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.
Banking Risks
Bank of America is an American bank that offers various
products as well as services all over the world. This bank has its
headquarters in North Carolina.
People risks
There are huge risks that are experienced by Bank of America
since it deals with money. People risks associated with Bank of
America are numerous. Bank of America 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 Bank of America 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

4. Financial risks
There are different types of financial risks that are faced by
Bank of America. One risk involves the bank paying its
creditors. Bank of America usually use the money of clients
who deposit their money in bank accounts to lend to borrowers.
Bank of America 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. Bank of
America 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
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

5. 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).
Bank of Americas board of directors
Bank of America is a monetary institution that has been very
successful due to its key people who mitigate risks at the bank.
The company has its board of directors who have specific roles
at the bank. The board of directors is many, but some of the
members are as follows. Paul Donofrio is the chief financial
officer at the Bank of America. Donofrio has the responsibility
of the overall financial management of the bank and therefore
ensures that risks are mitigated through financial planning,
balance sheet management, and another role that help in
protecting the company’s resources. Geoffrey Greener is the
chief risk officer at the bank. He has the responsibility of
overseeing the bank's corporate governance as well as the
strategy for global risk management and compliance.
Christine Katziff acts as the corporate general auditor of Bank
of America. Katziff leads an international team of audit as well
as credit review professionals who have the role of performing
independent reviews of the bank's internal controls and credit
standards to ensure that the make recommendation regarding the
company’s risk framework and its business strategies. David
Leitch acts as the Global General Counsel of the Bank and is,
therefore, responsible for overseeing the bank's legal functions

6. as well as its association with regulatory and law
implementation authorities all over the world (Corporation.,
2007).
Bank of America’s executive committee
Brian Moynihan is the chief executive officer at the company.
He is also the company’s president and CEO. He has the
responsibility of the consumer and small business banking,
corporate and investment banking as well as wealth
management. He is a lawyer as well as a businessman, and this
makes him qualified for his position he has also served as a
board member of other large organizations. Additionally,
Moynihan held many banking positions before he becomes the
president of the consumer and small business banking at the
bank.
Paul Donofrio is the company's CFO and also serves as the chief
financial officer at the Bank of America. Donofrio has the role
of overall financial management of the bank and consequently
guarantees that risks are mitigated through financial planning,
balance sheet management, and another role that help in
protecting the company’s resources. Mr. Donofrio helped as
Head of Global Transaction Services at Bank of America
Corporation since January 2012 to April 2015. He has worked
for this bank for a long time and therefore has the experience
and knowledge needed for this position.
Sarbanes-Oxley Act and other legislation
The SOX act has had a great impact on the Bank of America.
Banks are under many regulatory oversight and statuses and
with the introduction of SOX Bank of America and others
continue to experience a great deal of harm. The SOX is
duplicative of the requirements of the FDICIA, and the Bank of
America has been requesting that some provisions under the
SOX be eased to ensure that the regulatory burden is removed
(Ambler, 2006).
Under the Securities and Exchange Act of 1934, section 302
requires the principal executive officer as well as the principal
financial officer of the bank to take in certifications in annual

7. and quarterly reports filed by the bank.
Asset-liability management
Walter Muller is the company’s chief investment officer at the
bank and also handles asset-liability management at Bank of
America. There is a need for liquidity planning to mitigate
against liquidity risk. Interest rates projections help in
mitigating interest rates risks. Currency risks can be mitigated
by insuring against risks by taking an insurance cover. The
company ensures that the risk of funding of capital projects is
mitigated through the use of risk managers who help in advising
on the best ventures. Planning for profit and growth can be a
source of many risks but can be mitigated by proper
management of resources.
References
Ambler, D. E. (2006). Sarbanes-Oxley Act: Planning &
compliance. New York: Aspen.
Corporation., D. &. (2007). Financial risk management. New
Delhi: Tata McGraw-Hill.
Fight, A. (2014). Understanding international bank risk.
Chichester, West Sussex, England: John Wiley & Sons.
Information Resources Management Association. (2015).
Banking, finance, and accounting: Concepts, methodologies,
tools, and applications.
James, M. J. (2012). The story of Bank of America: Biography
of a bank. Washington, D.C: Beard Books.