Evolution of Banking
In banking, we used to have a fairly simple business model:
Find loans; structure them, administer, and collect; and fund
them with deposits.
Rolling Meadows and Norman McClave (1996, 29)
No organization is immune to risk. Moreover, each organiza-
tion's risks change constantly. While reaction is sometimes nec-
essary, detecting and reacting are insufficient as ways of
managing risk. Every organization must learn to anticipate and
prevent by implementing effective processes throughout the
company so that it proactively identifies, measures, and con-
trols business risk.
A. Andersen (1995, 2)
As is the case with management in general, banking risk management is an ever-changing process shaped by general factors, such as the institution objectives, financial trends, and government regulation; and by special factors, such as the structure and cost of liabilities, the structure and returns of assets, the maturity structure of assets and liabilities, and the size and source of the risk assumed by each asset and liability item.