[solved] Week 12 - Executive Summary

Every process in business is subjected to risks. A risk is the possibility of a business to have lower
anticipation of profits or experience a loss rather than a profit .Risk management is thus an important
department in any organization. Banks that operate in different countries are subjected to many
different risks when compared to local banks. For the banks, the key risks to take into
consideration include human resource and market risks. Checking at the history of the Bank of
America managing these risks has proven to be a great challenge. Market risks are a risk that
affects the market as a whole when they happen. In 2008 for example, Bank of America lost
$191 billion to the bad mortgage. The loss due to bad mortgage seemed to be contained in 2001
when the bank stopped offering the subprime mortgage. But why did it loss $191 billion due to
recession in 2008? The problem starts with the definition of risk. Despite the company realizing
the danger of subprime and related mortgages, it offered derivatives and other product directly
related to subprime mortgage. Besides that, the company failed to follow proper procedure in
providing loans. Therefore, it is evident to say that the risk identification, assessment, and
tracking was poorly established and that is why the company fell a victim of market risk. Besides
that, human resource of the bank is still suffering, and less is being done to contain the problem.
For example, employees are complaining of delayed promotion and overworking. Customers are
also complaining about poor customer support services. Complaints and dissatisfaction of staff
and clients is a part of human resource risks and the fact that less is being done to contain it
means that risk identification, assessment, tracking and implementation process are not working
properly. Without proper risk management framework that identifies and manages different
risks facing the company, it is difficult for management to achieve outstanding performance. The
UK is one of the areas with economic importance to Bank of America. Recently, there were new

labor laws introduced. Despite that, only few UK original banks have implemented them in
accordance to the risks associated with it. Checking employment report of the Bank of America,
UK branch, there is no indication suggesting that they are complying with the new requirement.
Risk management should be a continuous process involving tracking of situation changes
including regulation and economy. Bank of America seems to lack such framework in all of its
branches or if they are available less is being done to implement the procedures. A problem with
risk management system in modern times is a dangerous problem that when not contained on
time can cost the company growth, ability to expand and even ability to be sustainable. The
management needs to be extremely vigilant in managing risk since negligent has proven to be
costly to the bank.