THE ROLE OF CORPORATE GOVERNANCE IN BANK RISK MANAGEMENT

Banks are exposed to financial, operational, business, and event risks. Corporate governance provides a disciplined structure through which a bank sets its objectives and the means of attaining them, as well as monitoring the performance of those objectives. Effective corporate governance encourages a bank to use its resources more efficiently. Financial risk management is the responsability of several key players in the corporate governance structure. Each key player is accountable for a dimension of risk management. The key players are regulators/lawmakers, supervisors, shareholders, directors, executive managers, internal auditors, external auditors, and the general public.