The risks faced by commercial banks mainly include credit risk, market risk, liquidity risk, operational risk, legal risk, country risk, reputation risk and strategic risk, totaling eight major risks. In real life, commercial banks are a type of banking financial institution.

1. Credit risk

Credit risk is also called default risk, which means that the borrower cannot repay as required by the contract. The bank suffered losses as a result of the loan principal and interest. A commercial bank itself is an enterprise engaged in currency and credit business. The nature of its business determines that credit risk is the main risk it faces, and it is managed by the credit approval department of the commercial bank.

2. Market risk

Market risk refers to the possibility of suffering losses due to fluctuations in market value. The size of market risk mainly depends on the commodity market, currency market, capital market, etc. Changes in various market conditions. Market risks are managed by the financial markets departments of commercial banks.

3. Liquidity risk

Liquidity risk refers to the situation where the current assets held by the bank cannot meet the needs of immediate payment of maturing liabilities, causing the bank to lose its solvency and cause losses. possibility. It is managed by the planning and finance department of commercial banks.

IV. Operational risk

Operational risk refers to the risk of direct or indirect losses due to insufficient internal procedures, personnel, systems or improper operation. Operational risks are more losses caused by human errors. Therefore, various departments of commercial banks will be involved in the management of operational risks, such as: credit management, accounting settlement, market transactions and other businesses.

5. Compliance and legal risks

Compliance and legal risks refer to bank operations and management that violate laws, regulations or standards, resulting in them being subject to legal sanctions, supervisory measures, Risk of property damage or reputational damage. Generally, legal risks and compliance risks are involved together, but the scope of compliance risks is broader than the scope of legal risks.

Commercial banks have specially set up legal and compliance departments to manage compliance and legal risks.

6. Reputation risk

Reputational risk refers to the risk that the operations, management and other behaviors of commercial banks or external events lead to negative evaluations of commercial banks by stakeholders. This risk is generally managed by the commercial bank's administrative department or the department responsible for public relations.

7. Strategic Risk

Strategic risk is an internal risk of commercial banks and refers to the risk of losses caused by unclear or even wrong strategic guidance. Commercial banks have dedicated strategic management departments to manage this risk.

The above are the types of risks faced by commercial banks. If you want to enter a commercial bank to engage in risk management work, these are the introductory knowledge that you must understand. Of course, you must also constantly improve your hard and soft skills so that your career development can be more long-term.

Legal basis:

Article 7 of the "Law of the People's Republic of China on Commercial Banks" Commercial banks shall establish corresponding merger and acquisition loans in accordance with the principle that management intensity is higher than other types of loans Management systems and management information systems ensure that business processes, internal control systems and management information systems can effectively identify, measure, monitor and control the risks of M&A loans.