Risk exposure mitigation: Approaches and recognised instruments (2)

• Main Author: Matić Vesna
• Format: Article
• Language: English
• Published: Association of Serbian Banks 2014-01-01
• Series: Bankarstvo
• Subjects: risk exposure mitigation; simple approach; comprehensive approach; credit risk; eligible instruments; Standardized Approach; financial collaterals; haircut
• Online Access: http://scindeks-clanci.ceon.rs/data/pdf/1451-4354/2014/1451-43541403180M.pdf

The risk management function development in banks, along with the development of tools that banks can use throughout this process, has had the strong support in international standards, not only in the recommended approaches for calculating economic capital requirements, but also in the qualitatively new treatment of risk exposure mitigation instruments (Basel Accord II). The array of eligible instruments for exposure mitigation under the recommended approaches for their treatment becomes the essential element of economic capital requirements calculation, both in relation to certain types of risk, and in relation to aggregate exposure.