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This book, based on international standards, provides a one-step reference to all aspects of risk management in an electronic banking environment.
Using electronic delivery channels for banking services and products has become increasingly popular in recent years. Electronic banking makes it possible to offer banking services around the world 24 hours a day. The dependence on technology for providing the services with the necessary security, and the cross-border nature of transactions, involve additional risks for banks and new challenges for banking regulators and supervisors. This paper provides an overview of some of the issues resulting from the development of electronic banking and how they are currently being addressed by regulatory and supervisory authorities.
Thesis (M.A.) from the year 2010 in the subject Economics - Finance, grade: 2,0, University of Portsmouth, language: English, abstract: Risk management has been pivotal banking activity, particularly for the last 20 years. Volatile economic conditions and ever‐growing competitive forces have compressed profit margins and forced UK banks to look up to sophisticated and more comprehensive methods of identifying optimal risk‐return positions. Advanced technology and global business focus has presented opportunities to utilize comprehensive quantitative techniques to contain and manage risk exposure. Technology has played crucial role in establishing and dispersing electronic trading platforms giving access to equity and derivatives hence reshaping capital acquisition and risk management frameworks. The topic of risk management has been even more contextual in times of severe economic/financial crisis. Analysts have not only been critical of banks' uncollateralized lending but also of their excessive trading with derivative instruments. Assuming that no arbitrage opportunities exist, the question remains as to whether banks attempt to hedge their risk exposure or purely speculate on the direction of price movements. In this context, central task of this dissertation is to examine the role derivative instruments play in the UK banking system through aggregately assessing risk position of largest UK banks relative to aggregate trading volumes. Empirical analysis is conducted utilizing a two‐stage SUR technique. Results from first stage of empirical analysis confirm that risk premium on banks' equity securities is strongly related to market risk premium. More importantly, findings illustrate that exchange rate exposure of UK banks has more significant impact on stock returns compared to interest rate risk exposure. Second stage of the analysis fails to provide comprehensive conclusion due and produces controversial results. Nevertheless, exchange rate derivatives are found
Internet banking heightens traditional banking risks. GAO's review of 81 examinations found that 44 percent of the depository institutions examined had not completely implemented risk-management steps that regulators said are needed to limit on-line banking risks. Shortcomings included some institutions' lack of approval of strategic plans by their board of directors and a lack of policies and procedures at some institutions for Internet banking operations. However, too few examinations had been done at the time of GAO's review to identify the extent of any industrywide Internet banking-related problems. Regulators attributed the limited number of examinations to a diversion of examiners to deal with the Year 2000 computer problems and to the limited number of examiners with expertise in information systems. GAO found that some regulators could use more systematic methods for identifying institutions' plans for new Internet banking systems and maintaining this information centrally. GAO also found variations in the supervisory approaches the regulators followed to help ensure that institutions mitigate the risks posed by Internet banking. Finally, GAO found that the five regulators are beginning to work together to study third-party firms providing Internet banking support services. GAO summarized this report in testimony before Congress; see: Electronic Banking: Enhancing Federal Oversight of Internet Banking Activities, by Richard J. Hillman, Associate Director for Financial Institutions and Markets Issues, before the Subcommittee on Domestic and International Monetary Policy, House Committee on Banking and Financial Services. GAO/T-GGD-99-152, Aug. 3 (25 pages).