Which type of risk is the most difficult to quantify a Credit risk b Liquidity

Which type of risk is the most difficult to quantify

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Which type of risk is the most difficult to quantify? a)Credit riskb)Liquidity riskc)Legal riskd)Operating riske)Market risk 34
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Operational Risk • Business Interruptions, Transaction Processing, Inadequate Information Systems, Breaches in Internal Controls, Client Liability Legal Risk • Reputation Risk Capital or Solvency Risk • Liabilities > Assets Off-Balance Sheet Risk 35
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3.8 Evaluating bank performance: an application • Profitability Analysis for PNC in 2007 • Next few slides • Please attempt before class ! • This is also the tute Q for the week ! 36
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3.9 Financial statement manipulation • Off-Balance Sheet Activities – Window Dressing – Preferred Stock – Non-Performing Loans – Allowance for Loan Losses – Securities Gains and Losses – Non-Recurring Extraordinary Items 42
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3.10 Summary • Return on Equity Model • Profitability analysis • Risk analysis • Interpretation • Case studies 43
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3.11 Tutorial questions Review of “Evaluating Bank Performance: An application” The case of PNC, starting p121 in supplementary readings on [email protected] Plus ANZ 2011 44
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