As per BB guideline different types of risks faced by a financial institution are:
1. Residual risks: Collaterals can pose the risks like legal and documentation
risks
2. Credit concentration risk: Exposure in the same economic or geographic sector and/or in dependent industries
3. Interest rate risk: It in banking book has to be taken into account as a
potential risk.
- Gap or mismatch risk
- Basis risk
- Net interest position risk
- Embedded option risk
4. Liquidity risk:
- Term liquidity risk
- Withdrawal/call risk
- Structural liquidity
risk
- Market liquidity risk
5. Settlement risk: It arises when an executed transaction is not settled
6. Reputation risk: It arise due to lack of compliance, customer-friendly service, fair market practices, failure to deliver on commitments, high costs, etc.
7. Strategic risk
8. Environmental risk: The uncertainty or probability of losses that originates
from any adverse environmental or climate change events.
9. Other material risks