DOI: https://doi.org/10.18371/fcaptp.v1i28.163689

SCIENTIFIC PRINCIPLES OF RISK-MANAGEMENT IN TRANSNATIONAL BANKS

N. V. Tkachenko, О. D. Rozhko, О. M. Momot

Abstract


Internal risk management systems are designed to prevent, identify and eliminate the negative effects of the implementation of banking risks. In the article the authors explore the scientific foundations of risk management of transnational banks. Among the set of risks to which a transnational bank is exposed in the course of its activities, a special place is occupied by the currency risks and the risks of the countries in which such banks expand their capital. It is determined that the specific manifestations of currency risk in the activities of a transnational bank are transactional and translational risks. The problem of assessing the cumulative risk of a transnational bank activity is formulated using a universal indicator of cumulative risk through the amount of unpredictable financial losses that a banking institution may suffer in the course of its activities.Specific features of managing specific risks inherent in transnational banking operations (transactional risk, translational risk and host country risk) were identified, and the choice of risk management strategy (risk aversion, risk reduction and / or redistribution, risk acceptance) depending on the values of the risk factor of unexpected financial loss of a transnational bank was offered. This will increase the efficiency of management decisions and minimize the consequences of risk realization for the financial solvency of the bank.A specific interpretation of the risks of transnational banking operations has been formulated, namely: transaction risk, translational risk and host country risk. Depending on the values of the risk coefficient of unexpected financial losses of a transnational bank, a choice of a specific risk management strategy is proposed. The risk zones were graded depending on the values of the integral risk assessment of unexpected financial losses of a transnational bank. A structural-logical scheme has been developed to select the mode of supervision of the activities of transnational banks. A conceptual approach to risk management of transnational banks is presented schematically.

Keywords


transnational bank; risk management; risk assessment; historical modeling method; transactional risk; translational risk; host risk.

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Copyright (c) 2019 N. V. Tkachenko, О. D. Rozhko, О. M. Momot

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ISSN (print) 2306-4994, ISSN (on-line) 2310-8770