MANAGEMENT

Detailed explanation-1: -Answer: Credit Risk. 2 When a bank chooses the wrong strategy or follow a long-term business strategy which might lead to its failure, it is called. A Credit risk.

Detailed explanation-2: -The three largest risks banks take are credit risk, market risk and operational risk.

Detailed explanation-3: -Definition: Moral hazard is a situation in which one party gets involved in a risky event knowing that it is protected against the risk and the other party will incur the cost. It arises when both the parties have incomplete information about each other.

Detailed explanation-4: -There are five categories of operational risk: people risk, process risk, systems risk, external events risk, and legal and compliance risk.

Detailed explanation-5: -Strategic risk focuses on more than an analysis of the written strategic plan. It focuses on how plans, systems, and implementation affect the bank’s franchise value. It also incorporates how management analyzes external factors that impact the strategic direction of the company.