The Actuarial Society

The existence of loans have revolutionized the world by allowing individuals or even companies that lack the required credit to lend it from a third party. A big portion of the current day businesses take debt to expand, invest in research or even counter their losses and money lenders like banks make revenue by giving out those debts and earning an interest over the returning period. Small loans are simple to handle and usually don’t require any additional steps other than the routine. Banks have set interest rates for different ranges of amounts. However, There are certain individuals that require loans of big amounts. Banks protect themselves from credit risk by holding an asset of the borrowers as collateral. If an individual or a firm is in need of a big loan from a bank, Then according to the Reserve Bank of India(RBI) a single bank cannot give more than a specified 50% of the loan amount.This arrangement setup by the RBI is called The banking consortium. Introduction to banking

Operational risk can be defined as "the risk of a change in value caused by the fact that actual losses, incurred for inadequate or failed internal processes, people, and systems, or from external events (including legal risk), differ from the expected losses.” In simpler words, it is a risk faced by a company due to failed internal processes such as those of a faulty system, unsuccessful procedures, employee errors, and legal hazards. Some other factors include technological glitches such as breaches of personal data resulting from cybersecurity attacks or risks tied with automation and artificial intelligence. These can also be caused due to physical catastrophes such as cyclones, earthquakes, or man-made events such as terrorism and vandalism. Operational risk includes all other risks except those of credit and market. These risks can be as minor as an affordable loss caused due to poor management of human error; for example, a poorly trained employee may lose a sales opportuni

  RISK Our life is full of risks. Everyone in some way or other comes across a risk . We often hear  people around us saying “This investment is a risk” or “I took a risk by moving to a new country”. But what exactly is a risk? There are various ways to define it. However, the simplest explanation of risk is “the possibility of something bad happening.”  Risks come in all shapes and sizes. Financial risks are in the more prominent types of risks. People are hesitant in making investments with good returns as they are reluctant to bear the risk due to insufficient knowledge of risk management which makes it necessary to educate ourselves about these financial risks and learn to manage them for our financial independence. MARKET RISK One of the most crucial financial risks is “Market Risk”. As the name suggests, it is a risk that affects the entire financial market i.e. it affects entire industries as a whole. Basically, it is the risk of facing losses due to unfavorable changes in the m