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3.
Losses. An indicator of the overall risk of commercial banks is an unexpected decrease 
in net profit. This indicator covers the above categories. It follows that the level of risk in the 
bank's strategy and operations is reflected in the risk of losses of the bank. Risk and losses are 
considered interrelated, and risk can be quantified through losses. Risk is usually estimated in 
absolute and relative terms. Quantitatively, the risk reflects the amount of losses that the bank 
may incur as a result of a particular operation. However, it is not always possible to estimate 
these losses. If the probability of loss is proportional to the indicator characterizing the bank's 
activities, for example, the loan portfolio, the amount of income or expenses, a relative risk 
indicator arises. 
Our research shows that the main causes of risks in the banking sector are: 
• poor market research;
• inaccurate or insufficient information in the field of attracting and placi
ng resources; 
• un
reliable or incomplete information about the project, the facility and the credited 
clients, their financial condition; 
•
failure to take into account the specifics of the activities of industries or sectors; 
• qualifications and level of subjects or clien
ts, diversity of knowledge and goals for the 
use of funds, etc. 
The increase in the level of risk in commercial banks can be explained by the following 
factors: 
• problems occur randomly, unexpectedly;
• when identifying new tasks that do not correspond to
previous experience; 
• inability of the bank's management to make a decision to prevent financial losses;
• in certain c
ircumstances, the legislative framework or banking activities prevent the 
adoption of appropriate decisions, etc. 
In practice, the assessment of banking risks takes into account the possibility of 
customers' insolvency, a sharp deterioration in their financial condition, changes in exchange 
rates and securities, as well as the possibility of returning part of the funds, etc. 
Effective management of banking risks, in turn, requires taking the necessary measures 
to predict potential threats to banking activity, correctly assess the level of their probability, 
factors and negative consequences and eliminate them. At the same time, risk management in 
the banking sector is carried out simultaneously with the general banking system and a 
separate banking institution. The consistency of their activities is determined by banking 
supervision and staff qualifications based on mathematical evaluation methods.