Peculiarities of risk management in systemically important banks of Georgia
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Date
2024
Authors
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Journal ISSN
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Publisher
Ivane Javakhishvili Tbilisi State University Press
Abstract
At the present stage, global trends in the development of the banking system, the increasing flow of
new financial products and technological innovations, fierce interbank competition, instability of economic
processes and constant volatility of the financial services market lead to a sharp increase in banking risks,
which can have a negative impact on the solvency and profitability of banks. Therefore, the identification,
analysis, assessment and effective risk management are crucial for the liquidity and stability of the banking
system, as well as for ensuring the protection of depositors.
The article discusses and analyzes the features and problems of risk management in systemically important
banks of Georgia (Bank of Georgia, TBS Bank and Liberty Bank), and expresses opinions on the main
directions for improving risk management.
Keywords: risk management; systemically important banks; GRAPE–General Risk Assessment Program;
risk management model "Three lines of defense”; risk appetite.
Effective functioning of banks depends on several key factors, namely: proper banking management
(strategic planning, analysis, regulation and control of banking activities, as well as management of operations,
finance, personnel and marketing activities) and banking risk management strategies (identification of
risk types, assessment and corresponding ongoing control by the unit).
Systemically important banks of Georgia, despite the numerous causes of banking risks, manage to successfully
combat them, which is, first of all, a correctly chosen strategy and dispersion of the team of professionals.
Nevertheless, for the further development of commercial banks, changes are important and appropriate
that will reduce banking risks for both creditors and depositors, which, in turn, will lead to further improvement
of the bank's performance indicators.
In addition, banks should focus on diversification of liabilities, namely, on the distribution of risks across
different assets, geographic regions and sectors. Therefore, the expected negative consequences will not have
a major impact on the financial sector.
In order to protect against risks, it is advisable for banks to use the capabilities of modern hedging and
insurance systems, the formation of sufficient capital reserves, as well as the implementation and development
of modern IT systems, in particular artificial intelligence and the latest electronic systems for express
analysis.
At the same time, it is very important for banks to create and improve an optimal and rational internal
control system in order to promptly identify and reduce the negative results of their activities. This process
requires the active participation of employees and continuous improvement of their skills through training.
Description
1. საქართველოს ეროვნული ბანკი - რისკებზე დაფუძნებული საზედამხედველო ჩარჩოს - რისკების შეფასების საერთო პროგრამის (GRAPE) სახელმძღვანელო, თბილისი, 2022. https://nbg.gov.ge
2. თიბისი ბანკი-მმართველობითი ანფარიში 2023, https://tbcbank.ge
3. საქართველოს ბანკი - მმართველობითი ანგარიშგება 2023, https://bankofgeorgia.ge
4. ლიბერთი ბანკი - მმართველობითი ანგარიშგება 2023, https://libertibank.ge
5. https://www.creditriskmonitor.com – credit risk monitor
Keywords
Citation
IX International Scientific Conference: "Challenges of Globalization in Economics and Business", Proceedings , Tbilisi, 2024, pp. 338-344