RISK MANAGEMENT IN COMERCIAL BANKS

The establishment and development of market relations is impossible without the successful operation of the commercial banking system, since it plays an intermediary role between the creditors and the debtors and practically defines the vector of its development and officially plays the role of the implementer of monetary policy. Worldwide experience in banking practice reveals that adoption of new types of financial reporting, which, in turn, along with the transparency of banking activities considers the development of risk management and corporate governance of banks, comprehensive analytical and complex assessment of the opportunities, should be taken into account in the process of the functioning of the banking system in Georgia. The main problem of commercial banks is the credit portfolio risk analysis and assessment in the critical conditions; banks have to develop an effective credit risk management system. Successful realization of a bank's commercial objectives is impossible without a fundamental reorganization of its risk management system. Credit risk management field related to physical and legal entities, requires a particular change. Improvement of Commercial Bank's risk management system should be tailored to each category of customer, however the development of interest rate, market and operational risk management systems should be considered as well, that is a main task of banks. The main goal of operational risks should be elimination of drawbacks that are associated with simultaneous removal of the surplus control mechanism. The work shall be based on: • Deeper inventory of expected operational risks; • Assessment of expected economic outcomes of operational risks; • Economic analysis of the control system; • Qualitative modernization in regard to market risks considering financial risks. Accordingly, the processes associated with the credit risk require adoption of fundamental changes: 1. Development of a system for each client which will allow the client to openly assess the expected level of the credit risk; 2. In case of commercial lending commercial priorities coherent to risk assessment; 3. In the decision making process to increase the role of the function, when the credit is developed by several persons reviewing the risk management. We conditer a number of measures that should be taken for the operation of changes of commercial banks and its effective development. In particular : a) to introduce new types of financial statements, it will significantly contribute to the decision-making process and to the usage of new products by the customers, as well as raising public awareness and increase the confidence to the banks; b) the reforms that reduces the risk for creditors and depositors will improve the commercial bank's activity transpar - ency.