Risk avoidance policy

In the case of a bank, a special business policy that avoids any kind of risk position by avoiding a risk wherever possible or by fully backing risks taken with equity. – Such a policy would entail high opportunity costs. If a bank were to fully hedge all known risks, even those with a low probability of occurrence, this would tie up capital that could be used profitably elsewhere. Thus, weighing up the risks taken and their coverage is always an optimization calculation. What constitutes the “optimum” risk varies from institution to institution – for example, from ship mortgage bank to ship mortgage bank: Ship mortgage bank – to institution – for example: But it will probably never be zero. After all, taking risks is part of the banking business; after all, it is almost impossible to make a profit without taking risks. However, appropriate risk management remains important. – See balance sheet item cap, risk, risk, systematic, risk-bearing capacity, risk assumption principle.

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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
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