THE STRATEGIC APPROACH TO ASSESSING BANKING RISKS

Abstract

Banks face growing risks from both internal and external factors. Failing to address these risks and lacking sufficient knowledge can result in significant financial losses, such as bankruptcy and insolvency. These losses can lead to customer attrition and erode trust in the bank. The current study examines key banking risks, their various types, and approaches to measuring and evaluating them. It aims to answer inquiries regarding bank structure, operational activities, and financing operations. The objective of this study is to provide a clear understanding of effective methods for evaluating risks in the banking sector. It is crucial to assess risks accurately, as it serves as the initial stage in managing and mitigating potential risks. The study examined 38 Egyptian banks, selecting a sample of three banks at random. The sample included 100 senior and middle management personnel, who were given 150 questionnaires to complete. The study utilised a questionnaire for data collection, with empirical findings analysed using SPSS 26 and AMOS 22. The study found a clear link between strategic approach and banking risk assessment, emphasising the significance of minimising errors in business performance, especially when evaluating credit risks. The study highlights the importance of banks ensuring a safe work environment through ongoing evaluation processes to prevent collapse or errors. In addition, the risk assessment process is an essential step in evaluating environmental risks in banks. It involves the use of sophisticated tools and a thorough analysis of environmental factors to determine the financial risks to assets and portfolios. Management agents typically carry out this process.