The Art of Risk in Community Banks
Most community bank directors don't understand the risks that their bank is taking –; particularly since every bank's risk profile is so unique. The Art of Risk is specially written to provide the guidance community bank directors need to fully understand the risk/reward profile of their institution. And like its predecessor in this series, it is designed to be a concise, easy read for the committed bank director, because balancing risk and reward is truly an art.
It's Your Bank; Take Control of Risk
- Risk wears many faces. Your job is not to eliminate risks, but to balance them. As a bank director, you will be judged by your ability to assess, measure, monitor, and control risk.
- Risk is not a four-letter word. In fact, banks need to take on some risks to reap rewards. Often directors say, "I don't want to take any risk." But institutions that take little risk usually must live with lower returns.
- Does your model do these things? Effectively calculate EVE? Simulate a forward interest rate curve? Model each loan, investment, deposit, and borrowing? Project earning beyond one year? Illustrate core deposits effectively? Aggregate balances? Capture optionality? Show yield curve shifts and twists? It should!
- Credit risk: The mother of all risks. A risk management system does not equal an asset/liability model. As a director, you must be sure your bank's model is efficiently and accurately capturing risk. Directors must not rely solely on the internal audit.
This book can help you assess risk by providing advice, case studies, a do-it-yourself risk assessment process, and insights on how your bank may or may not be dynamically modeling risk.
