The main risks faced by commercial banks are as follows:
1. Credit risk: Credit risk is the main risk in the operation process of commercial banks. It is also generally called default risk and refers to the loan People are unable to repay the loan on time according to the loan contract signed with the bank, resulting in losses to the bank's own interests.
2. Market risk: The market risk that commercial banks need to bear mainly depends on the fluctuations in the commodity market or the currency market. Specifically, it refers to the fluctuation in the market when commercial banks invest or buy and sell real estate. Loss of profits due to price fluctuations.
3. Liquidity risk: Liquidity risk mainly refers to the inability of the liquid funds owned by commercial banks to meet the needs of users for due payment, resulting in the loss of the bank's liquidation ability.
4. Operational risk: Operational risk mainly refers to the direct or indirect losses that the bank suffers due to improper operations by internal personnel of the bank.
5. Legal risk: Legal risk mainly refers to the bank’s financial compensation due to legal disputes with users or organizational units. It is one of the reasons for the loss of bank assets.
6. Country risk: Country risk mainly depends on the political and economic conditions of the country where the bank is located. If for some reason, the people of that country are unable to repay their debts to the bank, it will, to a certain extent, cause direct losses in bank assets.
7. Reputation risk: Reputation risk mainly refers to the direct or indirect losses caused by commercial banks due to some negative external evaluations of them.
8. Strategic risk: For commercial banks, future strategic planning is an important factor in generating economic benefits. If a commercial bank's future strategy affects its overall future development direction, it will be detrimental to the bank itself.
The main business of commercial banks:
Commercial Bank (Commercial Bank), abbreviated as CB in English, is a type of bank. Its responsibilities are through deposits, loans, exchange, savings, etc. business, a financial institution that undertakes credit intermediation.
The main business scope is to absorb public deposits, grant loans and handle bill discounts, etc. General commercial banks do not have the right to issue currency, and their traditional business mainly focuses on deposits and loans.