Answer:
A risk assessment is really a formalization of thought processes that go onregularly, but it provides an opportunity to document the process, make sure youhave thought of everything that could go wrong and how the bank addressesthose risks, and have a finished product to include with management and boardapproval requests and information packages for regulators.
Regulators like to see risk assessments as new products, systems or businesslines are introduced so that they can see that you have thought things throughand properly addressed any risks. Take a look through your regulator's examprocedures and see how many times "risk based" is mentioned. Start out smallwith a new product process, then bring in your existing products/business linesas they come up for their annual assessment/budget.
Archive of Risk Management Questions
First published on BankersOnline.com 11/05/08
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