Wellfleet Bank Case
Case Analysis –The Wellfleet Bank risk management Case
This essay have be divided into four parts in order to answer the case study question, which explained the risk Wellfleet bank are facing of its strategy, the anticipated additional risk when Wellfleet’s recruitment of relationship managers from investment banks for large corporate deals, calculator the economic revenue, economic profit and expected loss , then analysis the issues in risk management process and give my own recommendation.
1 Risk that Wellfleet Bank are facing Wellfleet bank are facing several kinds of risks by this strategy. First risk of all is there are no risk appetite statement, because Dawes and Patricia Cromwell just periodic review on loan portfolio and had no direct involvement in it. Final decision can only make by chief credit officer with unlimited right. It can categorized as a example of operational risk, operational risk include a organization’s daily operation and cannot be eliminated as long as the process people and systems still imperfect. And we have market risk as second risk, it is a risk when Wellfleet facing changes in exchange rates, interest rates or asset prices. It’s also a risk must be consider especially in the time Wellfleet are making decision about a $1 billion loan business with Gatwick Gold corporation. And because Wellfleet had indentified both two kinds of risky loan which is leveraged and syndicated loan, bad debt provision increased every year, credit proposal increased form 220 to 300, concentration risk is also very important for Wellfleet because of the higher default risk, and the change of gold prices, exchange and interest rates will directly affected the Possibility of loans paid in full.
Wellfleet bank are operating in 78 countries, one of the biggest risk for global organizations is the foreign exchange risk, this risk can significantly affect the profit of the bank along with sovereign or country risk. And there are some
This essay have be divided into four parts in order to answer the case study question, which explained the risk Wellfleet bank are facing of its strategy, the anticipated additional risk when Wellfleet’s recruitment of relationship managers from investment banks for large corporate deals, calculator the economic revenue, economic profit and expected loss , then analysis the issues in risk management process and give my own recommendation.
1 Risk that Wellfleet Bank are facing Wellfleet bank are facing several kinds of risks by this strategy. First risk of all is there are no risk appetite statement, because Dawes and Patricia Cromwell just periodic review on loan portfolio and had no direct involvement in it. Final decision can only make by chief credit officer with unlimited right. It can categorized as a example of operational risk, operational risk include a organization’s daily operation and cannot be eliminated as long as the process people and systems still imperfect. And we have market risk as second risk, it is a risk when Wellfleet facing changes in exchange rates, interest rates or asset prices. It’s also a risk must be consider especially in the time Wellfleet are making decision about a $1 billion loan business with Gatwick Gold corporation. And because Wellfleet had indentified both two kinds of risky loan which is leveraged and syndicated loan, bad debt provision increased every year, credit proposal increased form 220 to 300, concentration risk is also very important for Wellfleet because of the higher default risk, and the change of gold prices, exchange and interest rates will directly affected the Possibility of loans paid in full.
Wellfleet bank are operating in 78 countries, one of the biggest risk for global organizations is the foreign exchange risk, this risk can significantly affect the profit of the bank along with sovereign or country risk. And there are some
References: 1 García Bernal, Manuela Cristina (1991). "Iberoamérica: Evolución de una Economía Dependiente". In Luís Navarro García (Coord.), Historia de las Américas, vol. IV, pp. 565-619. Madrid/Sevilla: Alhambra Longman/Universidad de Sevilla. ISBN 978-84-205-2155-8