The following paper looks at how the Royal Bank of Canada manages to minimize Interest Rate Risk (also known as Market Risk), Credit Risk, and how they manage their capital so that they have sufficient funds to remain solvent.
Written in 2002; 2,785 words; 4 sources; MLA; $ 83.95
Paper Summary:
This paper explores the key to successful banking which, according to the author, lies in the ability to balance a healthy growth rate, while at the same time analyzing the risks that your institution faces and taking action to minimize those risks.
From the Paper:
?Risk comes from the uncertainty of future events. Effective risk management involves the understanding of the risks associated with the various areas of the business and the associated operating environment. Investments are primarily exposed to foreign currency, interest rate volatility and credit risk. The Royal Bank of Canada has set formal policies and procedures that establish an asset mix among equity, fixed income and real estate investments; require diversification of investments within categories; and set limits on the size of exposure to individual investments and counter parties. In addition derivative financial instruments are used, where appropriate, to assist in the management of these risks.?
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