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Part - VII

5. Efficient decision-making

Appropriate decision at right time changes the velocity of risks. In terms of credit the appropriateness might start from initial interaction of customer seeking credit whereas, market risk, decision making start from identifying and selecting the right deal, right investment avenue and for operational risk the process of decision-making starts from evaluation of policy and procedures of each credit or investment.

Ideally, there should be decentralized decision-making system but the risk evaluation of deal ie, lending or investment decisions must be with in the risk management, investment and credit policy framework and procedural structure. Risk management department should have clear vision and right to suggest the concerned business or functional units to roll back of credits / investments as per the continuous monitoring of risks and day-to-day business trend.

We must discuss one point in this context ie, accountability of employee - no structure and system works without the employee accountability and ethics.

Concllusion

There are many banks like HSBC, Citibank, Deutsche bank have bank-wide risk management practice which contributed in their global success whereas banks and institutions like Sumitomo Corp, Barings, Bank of America, CSFB and UTI have failed due to lack of efficient bank-wide risk management practice (compliance and operational risks).

So the above comments emphasis the necessity of having bank-wide risk management to achieve the stated strategic objectives in a competitive, volatile and dynamic market conditions in an emerging Indian economy. We believe the above-described bank-wide risk management framework is easy workable, cost effective and efficient process without any hassles or hurdles of high-tech tools and techniques.

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