Financial Risk Glossary & FAQs

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A valuation reserve that banks set aside to cover potential losses from bad debts or loans that may not be repaid. 

Anti-money-laundering

Anything of value to which the firm has a legal claim. 

A way of measuring how profitably and efficiently assets are being used to produce sales. Net sales/Average assets

The term Automated Clearing House (ACH) network is a payment network in the US that facilitates electronic transfers of funds between bank accounts

AFS refers to financial assets that are not held for trading, held to maturity, or held for strategic reasons, and have a readily available market price.

Carrying value of assets or liabilities

Any deposit that is obtained, directly or indirectly, from or through the mediation or assistance of a deposit broker.

Any asset used to produce profits for an investor. 

Credit default swap

Asset provided to a creditor as security for a loan.

Interest Expense/Average Assets

A natural or legal person to which a bank has financial exposure.

Speculative intangible "asset." Digital tokens have no intrinsic value and depend primarily on ability of holders to sell to a greater fool. The crypto term encompasses many types commonly referred to as “coins” or “tokens”

A custody account is one in which securities or other assets are held by a bank on behalf of a customer under a safekeeping arrangement. Assets held in such capacity are not to be reported in the balance sheet of the reporting bank nor are such accounts to be reflected as a liability.

Failing to promptly pay interest or principal when due.

Banks commonly use derivative instruments for managing (positioning or hedging) their exposure to market risk (including interest rate risk and foreign exchange risk), cash flow risk, and other risks in their operations and for trading.

Total investment in subs / Equity capital

Overhead expenses / Net Interest Income + non-interest income

EL is a key metric used in credit risk analysis, offering financial institutions a reliable way to estimate potential losses across their lending portfolios.

Maximum potential loss. Unused Credit Lines/Existing Credit Lines

Suspension of loan payments

Any money or service owed to another party.

LCR = High-Quality Liquid Asset (HQLA) Amount / Total Net Cash Outflow Amount over a 30-day period under stress.

Net loss as % of loan amount. (Net loss + Recoveries)/Net Loss

A payment intangible with defined cash flows

The difference between interest and dividends earned on interestbearing assets and interest paid to depositors and other creditors, expressed as a percentage of average earning assets.

Net credit losses on loans and leases / Average loans and leases

Loans and leases 90 days or more past due, and loans and leases in nonaccrual status.

A non-performing loan is a loan in which the borrower is in default and has not paid the monthly principal and interest repayments for a specified period, usually 90 days.

PD quantifies the chance of a borrower defaulting on their debt. 

Net Income/Average Assets

Net Interest Income/Earning Assets

Net Income/Total Capital

A bank's assets or off-balance-sheet exposures, weighted according to risk. 

Cash and due from accounts, federal funds sold, securities purchased under resale agreements, and securities maturing in less than one year.

Sources: FDIC, BIS, WGA

The difference between the expected and actual loss, often used in risk management

A statistical measure of the potential loss of an investment over a specific period, within a given probability level.

An FAQ section can be used to quickly answer common questions about your business like "Where do you ship to?", "What are your opening hours?", or "How can I book a service?".

FAQs are a great way to help site visitors find quick answers to common questions about your business and create a better navigation experience.

FAQs can be added to any page on your site or to your Wix mobile app, giving access to members on the go.

To add a new FAQ follow these steps:

1. Manage FAQs from your site dashboard or in the Editor

2. Add a new question & answer

3. Assign your FAQ to a category

4. Save and publish.

You can always come back and edit your FAQs.

Yes. To add media follow these steps:

1. Manage FAQs from your site dashboard or in the Editor

2. Create a new FAQ or edit an existing one

3. From the answer text box click on the video, image or GIF icon

4. Add media from your library and save.

You can edit the title from the FAQ 'Settings' tab in the Editor. To remove the title from your mobile app go to the 'Site & App' tab in your Owner's app and customize.