What Are the Different Methods of Commercial Bank Risk Management?

Commercial bank risk management is a management activity carried out by commercial banks in order to reduce the risks that they may suffer during business management activities. The goal is to seek maximum profit with minimal risk. Its contents mainly include: risk identification, risk analysis and evaluation, risk control and risk decision-making. These four parts are in turn the four stages of risk management. Risk identification is to identify the risk factors that may bring unexpected losses or additional benefits to commercial banks in the complex macro, micro risk environment and internal operating environment around commercial banks. Risk analysis and evaluation is to predict the probability of occurrence of risk factors, the size of the losses or gains that may be caused to the bank, and then determine the bank's degree of insurance. Risk control is the economic activities carried out before or when a risk has occurred to reduce risk losses and increase risk returns, including risk avoidance, risk suppression, risk diversification, risk transfer, risk insurance and compensation . Risk decision-making is a decision-making process in which a bank operator chooses a risk under the premise of comprehensive consideration of risk and profit. Risk management is an indispensable part of asset and liability management of modern commercial banks. ^[1]