Chapter 7. Risk Management
In this chapter, we are going to discuss the various types of risk associated with the banking and financial domains. Banks and financial institutions are all exposed to risk, and they need to develop risk identification and risk mitigation mechanisms with the implementation of regulatory norms to stay competitive and profitable. In this chapter, we are going to discuss various techniques to measure different types of risk using R. It also includes risk pertaining to banking operations such as credit risk, fraud detection, and Basel regulations.
The chapter covers the following topics:
- Market risk
- Portfolio risk
- VaR
- Monte Carlo simulations
- Hedging
- Basel regulation
- Credit risk
- Fraud detection
Market risk
The risk for an investor ...
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