From the course: Introduction to Risk Management

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Monitoring risk

Monitoring risk

From the course: Introduction to Risk Management

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Monitoring risk

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- [Instructor] Through its ERM framework, a bank has identified and assessed the risks that it's exposed to and has decided on an appropriate response to those risks, to avoid, reduce, transfer, or accept the risks. These steps are completed after a bank determines its risk appetite, ensuring accepted risks do not exceed the bank's total risk capacity. Now a bank needs to monitor risks. An effective monitoring process should assure senior management and the board of directors that existing risk controls are in place and employees within the enterprise are following these controls. Risk monitoring is a critical stage of the ERM framework. There are several reasons for this. Risks are dynamic and can change quickly. Without proper monitoring, the previous steps of identifying, assessing, and responding to risk would be pointless. Risk monitoring collects up-to-date information on risk that can be incorporated into the ERM framework. Risk monitoring allows senior leadership to act…

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