Beruflich Dokumente
Kultur Dokumente
The first step is to identify the risks and assess the influence of that risk in context of the banking business, particularly in HBL For the purpose we discussed it with the officials of HBL and we identified the following risks: S# Risk Risk Description Some type of businesses are defined as highly risky by the management such as law firms, media channels, newspapers, publishers, property dealers and exposed persons If a person or firm has been defaulter in past with any bank or institution, that can be again and cause the loss for the bank The variation in economic conditions of the country can affect the credit policies resulting in increased credit risk and chance of loss Personal condition of a borrowers is highly considerable which includes the social class of the borrowers along with his health that will he be able to generate the money and return the credit If the growth of the business of the borrowers stops or faces sudden losses of any kind, can become the purpose of loss of the bank In case of any fictitious documents of the property the ultimate loss will be of the bank Age factor is also involved somehow as the old age borrowers can be threat for bank A proper assessment of the client regarding all the matters is of great importance. Any wrong detail can cause the loss for the bank Instability in the political system of the country is need to be assessed properly as it can cause in closer of several businesses and increase the chance of loss for the bank
Customer Risk
Defaulter Risk
Economic Effects
Business Losses
Property Documents
Political System
S# 1 2 3 4 5 6 7 8 9
Risk Customer Risk Defaulter Risk Economic Effects Personal Condition of Borrowers Business Losses Property Documents Age of the Borrowers Assessment of the Client Political System
Probability 0.50 0.30 0.70 0.30 0.50 0.30 0.10 0.50 0.70
Impact 0.40 0.80 0.20 0.40 0.20 0.80 0.20 0.80 0.20
Threat 0.20 0.24 0.14 0.12 0.10 0.24 0.02 0.40 0.14
Where the range is as follows: Higher Risk: Moderate Risk: Lower Risk: 0.01 0.05 0.06 0.15 0.16 0.72
S# 1 2 3 4 5 6 7 8 9
Risk Assessment of the Client Defaulter Risk Property Documents Customer Risk Economic Effects Political System Personal Condition of Borrowers Business Losses Age of the Borrowers
Threat 0.40 0.24 0.24 0.20 0.14 0.14 0.12 0.10 0.02
Priority Level Higher Higher Higher Higher Moderate Moderate Moderate Moderate Lower
Customer Risk
Some specific type of the clients are a potential risk increasers for the bank due to their nature of business which are however also potential customers for the bank. So, it is not an option to just lose those customers due to certain threats. All the bank needs is to hire a highly practical experienced person as an employee and provide him the relevant resources for a specific research on this segment to identify the threats and develop the suitable measures through which a proper assessment of these customers can be evaluated and avoid the involved risks.
Economic Effects
Economic conditions of the country are showing a continuous variation and keep threatening the bank for its operations. Mostly, the bank have safety measures in place but in addition bank needs to make assure that the motivation and satisfaction level of employees is high and they are committed to their work which actually assures that they are tracking the economic conditions and their effects on the bank operations and policies along with the development of new policies. Moreover, make sure that they are capable of facing any huge variation and avoid the maximum risk of loss for the bank.
Political System
Instability in political system and influence of political system is also one of the major risk that need to be taken care of and for the purpose bank need to develop some independent policies on the basis of equality concept for each and every borrower with no exceptions. However, its implementation might be a huge challenge for the bank but considering the reputation and management system, it is possible that the influential people will respect the policies.
This risk can be avoided quite easily. All the bank needs is to check the medical history of the client to ensure that he is free of any permanent disease or place a proper setup of recovery from the next of kin of the diseased client.
Business Losses
Initial policies are already in place to calculate the ratios and evaluate the trend analysis to know about the business of the client but in case it starts unrecoverable losses in future, bank needs to put some contingency planning for the recovery of the credit. Such as, providing some consultancy to the client for his business through which he might be able to avoid his losses and become a positive word of mouth for the bank.
It is a very small factor of risk but a very small part of attention requires that the bank should also check the age of the borrowers to ensure that he would be able to fulfill the requirements of the credit along with the recovery of the credit. Moreover, in case of any trouble put a proper next of kin setup is in place.