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Once a general framework of risk identification and management is developed, the techniques can be applied to different situations, products, instruments and institutions.

It is crucial for all banks to have comprehensive risk management framework as there is growing realization among IBs that sustainable growth critically depends on the development of a comprehensive risk management framework (Greuning and Iqbal, 2007).

A robust risk management framework can help banks to reduce their exposure to risks, and enhance their ability to compete in the market (Iqbal and Mirakhor, 2007). A reduction in each institution's exposure will reduce the systemic risk as well. Hence, it is necessary that banks have in place a comprehensive risk management and reporting process to identify, measure, monitor, manage, report and control different categories of risks.

2.2.1. Understanding Risk and Risk Management

It is important for staff of banking institutions to understand the aspect of risk in the banking operations and the risks that are inherent and exposed in their business operations. Better understanding of risk management is also necessary especially in the financial interMediation activities where managing risk is one of the important activities. A study conducted by Boston Consulting Group (2001) found that the sole determining success factors is not the technical development but the ability to understand risk strategically and also the ability to handle and control risk organizationally. Secondly, in order to realize a risk based management philosophy, the attitude and mindset of the employees need to be changed whereby they must be brought to understand that managing risk is crucial for success. This implies that there must be intensive training, clearly defined structures and responsibilities, as well as commitment to change. In addition, it was identified that banks in North America and Australia concentrate on risk management primarily to enhance their competitive positions. Meanwhile in Europe, Asia and particularly in South America, risk management is considered primary from the perspective of regulatory requirements.

Then, Al-Tamimi and Al-Mazrooei (2007) found that the UAE banks staff have good understanding of risk and risk management, which might give an indication about the ability of these banks to manage risks efficiently in the future. Moreover, understanding risk and risk management had positive effect on risk management practice although it is insignificant.

2.2.2. Requirement for Risk Management

Risk management framework is important for banks. The risk management strategy must be integrated with its overall corporate strategies (e.g. Froot and Stein, 2004). In conjunction with the underlying frameworks, basic risk management process that is generally accepted is the practice of identifying, analysing, measuring, and defining the desired risk level through risk control and risk transfer. BCBS (2001) defines financial risk management as a sequence of four (4) processes: (1) the identification of event本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。