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Risk-adjusted profitability management at banks

Risk-adjusted profitability management at banks

This report talks about the importance of credible profitability management process and role of risk-adjusted parameters to measure performance at various levels of granularity within banks. A clear and transparent risk-adjusted profitability management process empowers business units to take strategic decisions involving trade-off between risk and returns. The risk-adjusted parameters enables senior management normalise the financial performance by the amount of risk undertaken and helps in formulation of better market strategy related to pricing and offerings. This report also covers about the various components of risk-adjusted profitability measures and the way forward for banks to implement it. In the last sections, it talks about the various challenges and key success factors and role of technology in implementation of risk-adjusted profitability management at banks.