Developing a Model for Evaluating the Effectiveness of Risk Management in the Banking Industry

• Main Authors: Ramin Ghorbani, Gholamreza Kordestani, Hamid Haghighat, Mohammad Hossein Ghaemi, Hamid Azizmohammadlou
• Format: Article
• Language: fas
• Published: University of Tehran 2021-02-01
• Series: تحقیقات مالی
• Subjects: risk management; risk management effectiveness assessment indicators; basel committee statements; coso committee statements; ifrs
• Online Access: https://jfr.ut.ac.ir/article_80198_a3080e5f6c1eaa98ef04a78eb54d1d5c.pdf

Objective: The purpose of this paper is to develop a model for evaluating the effectiveness of risk management according to the environmental characteristics and conditions of the banking industry. Unlike previous studies, all aspects of risk have been considered in this study. Also, given that the Basel Committee Statements provide minimal requirements for determining the financial health of banks, this study intends to evaluate indicators for assessing the effectiveness of bank's risk management, taking into account Basel Committee statements, International financial reporting standards for banks and COSO Committee statements. Methods: In this research, a qualitative method and a grounded theory-based approach have been used. For this purpose, an integrated model of risk management effectiveness has been Provided by obtaining the opinions of banking industry experts, and in particular members of the Bank Risk Committee, while extracting the risks of the banking industry as well as factors affecting the effectiveness of risk management. Results: The results of the study showed that the country's banks are exposed to financial, operational, strategic, business and eventual risks. The findings showed that the effectiveness of risk management can be assessed by 47 indicators in financial, operational, strategic, business and event categories. The results also showed that in addition to the performance of the central bank, the introduction of new laws and changes in laws and regulations play the most important role in improving banks' risk management effectiveness. Finally, the findings of the study showed that effective risk management in addition to the positive consequences for the organization has positive consequences at the community and international level. Conclusion: The indicators obtained in this study showed that in addition to common indicators for assessing effectiveness of risk management, there are other indicators based on the economic environment of Iran that can be effective in assessing effectiveness of risk management in the banking industry.