Assignment for Chapter Nineteen The following articles talk about risks for banks. Credit risk is just one or many risks faced by the management of the bank. Along with Credit risk. I would like you to review one of the other risks faced by the bank manager and explain why it is as important today to manage these risks as it was 5 years ago or 50 years ago. This assignment should be saved as a Word document when submitted to your drop-box in D2L. Please remember to cite your work even if it is just the text. FORMS OF RISK Market Risk is a major type of risk that arises due to market factors, especially macroeconomic factors, such as the movement of interest rates, volatility of exchanges rates, changes in prices of commodities, bonds and equities. Adaption of pragmatic measures could effectively mitigate the adverse effect of market risk on the performance of institutions in the financial industry. Credit Risk refers to the likelihood that counterparty may not pay amounts (debts) owed to the other party when they fall due, it is the risk that a borrower will not repay a loan according to the terms of the loan, either defaulting entirely or making late payments of interest or principal. Stated differently, it is the risk characterized by an uncertainty in counterparty's ability to meet his or her obligations in accordance with agreed upon terms. This is so severe with the financial industry because it could arise from both internal and external factors. Usually, competition in the industry leads to many adverse and moral hazards, resulting in loan default. Operational Risk relates to loss attributable to action on or by people or processes; infrastructure or processes, infrastructure or technology or similar, which have an operational impact, including fraudulent activities. It refers to the risk of loss resulting from inadequate or failed internal processes, people and systems, or from external events. Operational risk includes internal and external fraud; employment practices and workplace safety, clients, products and business practice; damage to physical assets, business disruption, and system failures execution; delivery and process management. Prudent internal control measure could mitigate operational risk. Liquidity Risk is the risk that amounts due for payment cannot be paid due to lack of funds. This creates the problem of overall poor performance since inadequate cash flow or liquidity could limit the frequent transactional activities of the firm. Legal or Regulatory Risk is the risk of non-compliance with legal or regulatory requirements. The emergence of such a risk could lead to a huge amount of cost and a decrease in revenue or close down of