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15 Cards in this Set
- Front
- Back
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The risk incurred by an FI when the maturities of its assets and liabilities are mismatched.
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Interest rate risk
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The risk incurred from assets and liabilities in an FI's trading book due to changes in interest rates, exchange rates, and other prices.
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Market risk
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The risk that promised cash flows from loans and securities held by FIs may not be paid in full.
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Credit Risk
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The risk incurred by an FI as the result of activities related to its contingent assets and liabilities held off the balance sheet.
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Off-balance sheet risk
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The risk that exchange rate changes can affect the value of an FI's assets and liabilities denominated in non-domestic currencies.
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Foreign Exchange risk
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The risk that repayments to foreign lenders or investors may be interrupted because of restrictions, intervention, or interference from foreign governments.
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Country or sovereign risk
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The risk incurred by an FI when its technological investments do not produce anticipated cost savings.
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Technological risk
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The risk that existing technology, auditing, monitoring, and other support systems may malfunction or break down.
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Operational risk
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The risk that a sudden surge in liability withdrawals may require an FI to liquidate assets in a very short period of time and at less than fair market prices.
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Liquidity risk
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The risk that an FI may not have enough capital to offset a sudden decline in the value of its assets.
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Insolvency risk
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The risk of default of the borrowing firm associated with the specific types of project risk taken by that firm.
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firm-specific credit risk
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The risk of default associated with general economy wide or macro conditions affecting all borrowers.
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Systematic credit risk
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a credit guarantee issued by an FI for a fee on which payment is contingent on some future event occurring.
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letter of credit
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The degree to which an FI's average unit costs of producing financial services fall as its outputs of services increase.
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Economies of scale
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The degree to which an FI can generate cost synergies by producing multiple financial service products.
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Economies of scope
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