earnings risk
31operations risk — The risk to the bank that errors made in the course of conducting its business will result in losses. The Federal Reserve calls this operational risk and states in its definition that operational risk arises from the potential that inadequate… …
32value at risk — alue at risk ( VAR) The amount or percentage of value that is at risk of being lost from a change in prevailing interest rates (similarly defined for things other than interest rates as well). The sensitivity of the value of a single financial… …
33foreign exchange risk — One of nine risks defined by the OCC. The risk to earnings or capital arising from adverse movement of foreign exchange rates. The Federal Reserve includes this risk in its definition of market risk. American Banker Glossary The risk that a long… …
34transaction risk — One of nine risks defined by the Office of the Comptroller of the Currency. The risk to earnings or capital arising from problems with service or product delivery. The Federal Reserve and most banks refer to this risk as operations or operational …
35compliance risk — One of nine risks defined by the Office of the Comptroller of the Currency ( OCC). The risk to earnings or capital arising from violations of or nonconformance with laws, rules, regulations, prescribed practices, or ethical standards. This risk… …
36equity value at risk — ( EVAR) A less commonly used synonym for value at risk. The quantity by which the assumed market value, or portfolio value, of an institution s equity is projected to decline in the event of an adverse change in prevailing interest rates. One… …
37legal risk — The risk to earnings or capital arising from unenforceable contracts, lawsuits, adverse judgments, or nonconformance with laws, rules, and regulations. One of six risks defined by the Federal Reserve. The Office of the Comptroller of the Currency …
38option risk — The risk that a change in prevailing interest rates will lead to an adverse impact on earnings or capital caused by changes in the timing of cash flows from investments. Cash flows may be received earlier than expected as a result of the exercise …
39reinvestment risk — The risk of a decline in earnings or capital resulting from the fact the interest and/or principal cash flows received by investors during the time that an investment is held must be reinvested at a lower than expected rate as a result of a… …
40rate risk — The risk that the entity s earnings and/or its capital may be reduced by an adverse change in prevailing interest rates. American Banker Glossary In banking, the risk that profits may drop or losses occur because a rise in interest rates forces… …
