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RISK MANAGEMENT GUIDELINES FOR BANKS AND FINANCIAL INSTITUTIONS
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In the course of conducting banking business, banks and
financial institutions (hereinafter referred to as ‘institutions’)
assume risks in order to realize returns on their investments. On the
other hand, risks assumed have the potential to wipe out
expected returns and may result into losses to the institutions.
These losses could be either expected or unexpected. Expected
losses are those that an institution knows with reasonable
certainty will occur (e.g. the expected default rate of loan
portfolio) and are typically reserved for in some manner.
Unexpected losses are those associated with unforeseen events
(e.g. losses due to a sudden downturn in economy, falling
interest rates, natural disasters, or human action such as
terrorism). Institutions rely on their capital as a buffer to absorb
such losses.
Bank of Tanzania - Organizational Body
NONE
RISK MANAGEMENT GUIDELINES FOR BANKS AND FINANCIAL INSTITUTIONS
Management
English
2010
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