2 Credit Risk
According to Adekanye, he affect the influence of market force upon the availability of funds, this create liquidity risk upon the movement of foreign exchange risks. Market processes are related to economic system of financial and political developments. To avert a crisis situation in the sources and uses of fund.
Hence the control and management of the market risk can be achieved by the following:-
a. Operation of active money market. Through the naira, money is not yet matured
b. Diversifying sources of funds, types of instrument and well articulated matching principles.
Furthermore, the probability is always there that credit which is extended to this form of risk, he recommended the divers to the nature of debtors and their need or location. Added to this is the maintenance of the standard of credit management. The needs for provision or bad debts are important in the acceptance of marketable assets securities.
Seminaries, customers need assurance that the bank is always in position to meet their cash document therefore the bank must to maintain the customer confidence that measure they must keep sufficient stock for liquid asset and as statutory liquidity ration must be observed in bank.
Analyzing risk, Mayo BPP 1990 Financial Management study text differentiate risk from uncertainty, accordingly risk occurs when it is unknown, the future outcome, when the various possible future outcome maybe expected with some decree of confidence of the knowledge of past or existing events. In the words probabilities of alternatives outcome can be estimated.
1 Business Risk
2 Financial Risk
Because risk is seen as that associated with a project undertaken, financial risk is considered as that which helps the company in the areas that may not be able to make sufficient profit after paying debts interest, to finance a satisfactory divided method or risk analyzing like using profitability analyzing for the cash low which is also considered.
Management of risk has assumed such as important dimension in banking operations, which could be considered under two main approaches.