| Abstract [eng] |
Suitable commercial bank risk assessment, as one of the most important unit of the financial system, is always a priority. Properly assessing the risk of bank may help to prevent financial crises in time, while avoiding unnecessary constraints on the delays in the financial sector and the economy development. The banks themselves also need to be aware of their risk assessment systems - managers continually assess individual projects or investment risks involved, bank managers make strategic decisions on profitability and risk profile of the whole organization level. However, it is clear that in many countries steady banking supervisory authorities procedures of the risk assessment process and the banking prudential norms are rather mechanical, does not guarantee the security of banking activities, and creates incentives for sub-optimal allocation of banks financial assets portfolio. One of the main sources of bank risk - market risk, which must be properly managed to avoid losses or even bankruptcy. This risk can ocurre only when the financial institution has some open positions on any instrument. Market risk is functioning through the commercial activities, and a total bank balance, and sometimes is referred to the position or price risk. As the Lithuanian bank characterizes, market risk - the likelihood that market variables such as interest rates, exchange rates, equities, commodities and others change so that the bank‘s contract will suffer a loss. |
