Individual Assignment: The Commercial Banking Industry in Research Jamaica and the Risk faced Methodologies

Research Methodologies Module Code: RES 3001 Date: October 10, 2011

Individual Assignment: The Commercial Banking Industry in Research Jamaica and the Risk faced Methodologies Background of Study The Commercial Banking Industry in Jamaica has evolved over the decades and has transformed its services into a more customer friendly industry. The industry is confronted with different types of risk or uncertainty with its day to day operations. The risk faced by one bank is also the risk that another bank confronts but at different level. A good risk management system is therefore very important for the survival of the commercial banking institutions. The Commercial Industry has embarked upon upgrading their risk management and control system, due to the past where firms that were performing well suddenly announces that they have large losses due to credit exposures that might have turned out unfavorable to the company and interest rates increasing. Simultaneous to this activity, in part because of the recognition of the industrys vulnerability to financial risk, the Wharton Financial Institutions Center, with the support of the Sloan Foundation, has been involved in an analysis of financial risk management processes in the financial sector. Failures of risk management (such as Barings Bank, Metallgesellschaft, and Orange County), has been a widespread call for better quantification of the financial risks faced by corporate and financial service firms. Comprehensive research has been done on the issue or risk faced by the Commercial banking Industry, however, does these research contribute to the sustenance of the sector? Or has the problem of strategic risk management process have been solved?

Individual Assignment: The Commercial Banking Industry in Research Jamaica and the Risk faced Methodologies Problem Statement Risk Management is vital to the survival of the Industry and therefore it is necessary to understand the types of risks encountered and how these can be managed. Understanding the challenges faced by the Commercial Industry, the questions arises What are the risks faced by the Commercial Banking Industry in Jamaica and how are they managed. Purpose of the study This research paper will embark on the types of risk the commercial banking industry encounters and how these risks are managed. It will seek to understand the importance of a proper risk management system and how it is to be implemented.

Research Questions/ Subtopics: 1. What Type of Risk Is Being Considered? 2. What are the risk management policies been implemented in Jamaica Banking Industry? 3. How important it is to monitor the risk management system? 4. What are the types of management system that contribute to the failure of the banking industry

Significance of Study Upon the completion of this research paper, it will be of benefits to the researcher as it will highlight the importance of proper risk management system. Also it will be beneficial to the Jamaican Commercial Banking Industry in the mean of a guide to understand the

Individual Assignment: The Commercial Banking Industry in Research Jamaica and the Risk faced Methodologies various forms of risk faced by the sector and how to manage these threats. This research will serve as future references to other individuals research and the Banking Regulator of Jamaica and other countries.

Reference Anthony M. Santomero- Commercial Bank Risk Management: an Analysis of Process Christopher Marshal and Michael Siegel Value at Risk: Implementating a Risk Measurement Standard

Glossary 1. A commercial bank (or business bank) is a type of financial institution and intermediary. It is a bank that provides transactional, savings, and money market accounts and that accepts time deposits 1. Risk: this is the potential that a chosen action or activity (including the choice of inaction) will lead to a loss (an undesirable outcome) 2. Risk Management: is the identification, assessment, and prioritization of risks 3. Market risk: is the risk that the value of a portfolio, either an investment portfolio or a trading portfolio, will decrease due to the change in value of the market risk factors. 4. Operational Risk: a risk arising from execution of a company's business functions 5. Systematic Risk: risk inherent to the entire market or entire market segment.

Individual Assignment: The Commercial Banking Industry in Research Jamaica and the Risk faced Methodologies 6. Commercial Banking Industry: types of financial institution and intermediary. 7. Intermediary: is a third party that offers intermediation services between two trading parties.