Risk Management and Value Creation in Financial Institutions

Author: (German) Gerhard Schrank Translator: Jia Weiguo Germany/Germany
Publisher:
Publishing Date: 2006-12-01
Features: The increasingly fierce competition among commercial banks and the rising demands of shareholders for investment returns have forced financial institutions to pay more attention to the management of value creation. Today, risk remains a core element of the banking industry, and understanding risk management is crucial. However, it was only recently that the banking industry gradually realized that risk management activities should be examined from the perspective of risk-return, i.e., from the perspective of value creation. This book conducts an in-depth and comprehensive study on this issue and explores the current risk management activities of financial institutions from both theoretical and practical perspectives. The author proposes a value assessment model framework that can be used by commercial banks to conduct comparative evaluations, helping them identify key areas of risk control and develop corresponding risk control structures. The unique aspect of this book lies in its connection between the risk management of financial institutions and value creation, providing a detailed analysis of the relationship between the two. Its insights and methods can effectively help financial institutions create economic value through prudent risk management.
The author first defines bank value maximization and risk management, revealing their relationship while discussing whether this relationship has an empirical basis. The author also explores various financial theories related to risk management and value creation and proposes a comprehensive framework for managing the relationship between the two. The book also summarizes the core elements of effective risk evaluation, explaining how to use current risk evaluation indicators from a value assessment perspective to judge the various risks faced by banks. Value assessment is a broad guiding tool, and the book also uses it to argue whether risk-adjusted return on capital is a good capital budgeting tool for banks, helping them identify value. Based on this broad perspective on the risk management and value creation of financial institutions, the author introduces how to use the academic analysis in this book to make major decisions regarding risk management and value creation.
This book can serve as a required textbook and teaching reference for faculty, graduate students, and doctoral students in finance programs across the country. Commercial banks can select it as a training textbook for senior financial risk management for management personnel. Financial doctoral students and financial research experts can use it as high-quality reference material. The book is also suitable for other professional graduate students, financial practitioners, and all social individuals interested in financial risk management and value creation.
The increasingly fierce competition among commercial banks and the rising demands of shareholders for investment returns. These pressures have forced financial institutions to pay more attention to the management of value creation. Today, risk remains a core element of the banking industry, and understanding risk management is crucial. However, it was only recently that the banking industry gradually realized that risk management activities should be examined from the perspective of risk-return, i.e., from the perspective of value creation.