Operational Financial Risk Management Problems Business Essay

Operational Financial Risk Management Problems
Name Course Instructor Date
1. Identify one (1) enterprise risk management disclosure and one (1) operational risk management disclosure from the Resource. Be specific as to page and section.
In the 2019 annual report (p. 90), BAC reports on credit losses as part of enterprise risk management disclosure. Similarly, in the 3rd quarter of 2020, the bank reports on credit losses for the three months ended September 30, 2020 compared to 2019 (BAC,10-Q, p. 45). The risk management committee set aside the standards based on the perceived level of risk. Operational risk management includes a focus on the legal and IT risks besides the use of Basel 3 to calculate risk-weighted assets (BAC, 2029, p.66).
2. Describe the disclosure (a) and why you characterized as either enterprise or operational risk (b). You should refer to either (i) the text, or (ii) materials provided in class as points of reference.
Enterprise risk management tools at Bank of America include scenario analysis loss reporting, and risk and control self-assessments (RCSAs). In the enterprise risk management, BAC reports allocation of the allowance for credit losses by product type as part of the proactive credit risk management initiatives. The Board’s Enterprise Risk Committee (ERC) is involved in risk management including managing the bank’s operational risk
Operational risk is the probability of incurring losses resulting from exposure to the inadequacy or failures in internal processes, the actions of people or systems or those that are the product of external events (BAC, 2019, p.63). Operational risk governance helps to manage exposures and indicates the risk of loss from inadequate or failed processes, people and systems or from external events. The bank’s Corporation Regulatory Capital is reported considering under Basel 3 as part of the operations risk management (6BAC, 2019, p.7). Reports on regulatory capital for operational risk include regulatory incentives and the capital requirements for the financial entity where the bank applies advanced models to calculate the regulatory capital and rate the operational risks.
3. Choose one (1) of the disclosures you reported on and give you assessment of its adequacy to the consumers of the report. Justify you assessment with at least one (1) specific argument.
The capital requirement is determined and Basel III indicates the regulatory capital requirements in different lines of business in the financial year ended 2019. The capital composition and ratio indicate that the company is well organized as per the regulatory requirements. There are positive ...