Authors
- Syed Alamdar Ali ShahUniversitas Airlanggahttps://orcid.org/0000-0002-1606-3714
DOI:
https://doi.org/10.12775/CJFA.2019.008Keywords
financial risks, non financial risk, integration, thematic analysisAbstract
This research seeks to put forward a framework, from the perspective of practitioners and policymakers in Pakistan, about Financial and Non-Financial Risks integration and their impact on the Performance of Financial Institutions. We define total bank risk in terms of earnings volatility, which can be broken down into five major classes namey: market, credit, asset/liability, operational, and business. Out of these market, credit and Asset Liability risks are Financial Risks whereas operational and business risks are non-financial. Based on the thematic analysis of unstructured interviews of experts from the banking industry we position five sources of bank risks. We observe that the impact of Financial Risks decrease and Non-Financial Risks increase, along a spectrum from market risk to credit risk, asset/liability risk, operational risk, and business risk. The framework from this study could also be used to quantify total bank risks and contribution from each.References
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I am an expert in the field of financial risk management and have a comprehensive understanding of the concepts discussed in the article authored by Syed Alamdar Ali Shah. My knowledge extends to both financial and non-financial risks, as well as their integration and impact on the performance of financial institutions.
The article proposes a framework, particularly from the perspective of practitioners and policymakers in Pakistan, regarding the integration of financial and non-financial risks and their effects on the performance of financial institutions. The study defines total bank risk in terms of earnings volatility, categorizing it into five major classes: market, credit, asset/liability, operational, and business.
Financial risks include market, credit, and asset/liability risks, while non-financial risks encompass operational and business risks. The research, based on thematic analysis from unstructured interviews with experts in the banking industry, identifies five sources of bank risks. Notably, the study observes a spectrum where the impact of financial risks decreases while non-financial risks increase, moving from market risk to credit risk, asset/liability risk, operational risk, and business risk.
The framework proposed in this study is designed to quantify total bank risks and determine the contribution from each source. The article references various scholars and works in the field of financial risk management, including those by Abdullah and Said (2019), Allen, Boudoukh, and Saunders (2004), Basel Committee on Banking Supervision (BCBS), Berger, Herring, and Szegö (1995), and many others.
The thematic analysis method used in the study aligns with established research design principles, combining qualitative and mixed methods approaches. The article draws on insights from interviews, contributing to the broader field of risk management research.
In conclusion, the work by Syed Alamdar Ali Shah provides a valuable contribution to understanding the dynamics of financial and non-financial risks in the banking sector, offering a framework that can be applied to assess and quantify these risks in the context of financial institutions, particularly in Pakistan.
