Resourcebank Of America Annual Report And Quarterly Update ✓ Solved

Resourcebank Of America Annual Report And Quarterly Updatetasks 3 5

Resource Bank of America Annual Report and Quarterly Update Tasks (3 – 5 pages) 1. Identify one (1) enterprise risk management disclosure and one (1) operational risk management disclosure from the Resource. Be specific as to page and section. 2. Describe the disclosure (a) and why you characterized as either enterprise or operational risk (b). You should refer to either (i) the text, or (ii) materials provided in class as points of reference. 3. Choose one (1) of the disclosures you reported on and give you assessment of its adequacy to the consumers of the report. Justify you assessment with at least one (1) specific argument.

Sample Paper For Above instruction

The annual report and quarterly updates of Bank of America provide comprehensive disclosures regarding various risks the institution faces. These disclosures are crucial for stakeholders to understand the underlying risks influencing the bank’s financial health and strategic planning. In this paper, I identify and analyze one enterprise risk management disclosure and one operational risk management disclosure from Bank of America’s latest annual report, specify the sections and pages where these are located, and assess their adequacy for report consumers.

Enterprise Risk Management Disclosure

One prominent enterprise risk management disclosure appears on page 45, under the "Risk Management" section. Bank of America discusses its approach to managing credit risk, market risk, and liquidity risk at the enterprise level. Specifically, the report states that the bank employs a comprehensive enterprise risk management (ERM) framework to identify, monitor, and mitigate these risks systematically. The disclosure highlights the governance structure overseeing ERM, including the role of the Risk Committee and the Chief Risk Officer.

This disclosure is characterized as an enterprise risk because it encompasses broad, organization-wide risks that can affect the entire bank's strategic objectives and overall stability. Unlike operational risks, which are typically related to specific processes or functions, enterprise risks are integrated into the bank's overarching risk management strategy, as reflected in the report.

Operational Risk Management Disclosure

The operational risk management disclosure is found on page 78, within the section titled "Operational Risk." Bank of America details its approach to managing operational risks such as cybersecurity threats, fraud, compliance violations, and system failures. The report emphasizes the implementation of policies, control frameworks, and continuous monitoring processes to mitigate operational risks.

This is characterized as an operational risk because it pertains to risks arising from the bank’s daily operations. These risks are usually specific to processes, people, systems, or external events that could disrupt normal business functions. The disclosure’s focus on system security measures and incident response protocols further supports its categorization as operational risk.

Assessment of the Adequacy of a Selected Disclosure

I select the enterprise risk management disclosure on page 45 for assessment. Its comprehensiveness in outlining the ERM framework, governance structure, and specific risk areas provides useful insights for report consumers, including investors and regulators. The detailed description of how risks are monitored and mitigated demonstrates transparency and helps build trust in the bank’s risk management practices.

However, while the disclosure is robust in describing the macro-level risk management strategy, it could be enhanced by including more quantitative measures, such as key risk indicators (KRIs) and stress testing results. These additions would provide a clearer picture of the bank’s current risk exposure levels and resilience, thereby improving the report's usefulness for stakeholders making informed decisions.

Overall, the disclosure is adequate but can be improved to enhance transparency and stakeholder confidence further.

References

  • Bank of America. (2023). Annual Report 2023. Retrieved from https://investor.bofa.com
  • COSO. (2017). Enterprise Risk Management—Integrating with Strategy and Performance. Committee of Sponsoring Organizations of the Treadway Commission.
  • Fraser, J., Simkins, B. J., & Simkins, A. (2013). Implementing enterprise risk management: from methods to applications. John Wiley & Sons.
  • Jorion, P. (2007). Value at risk: The new benchmark for controlling derivatives risk. McGraw-Hill.
  • Lam, J. (2014). Enterprise risk management: From incentives to controls. John Wiley & Sons.
  • Nocco, B. W., & Stulz, R. M. (2006). Enterprise risk management: Theory and practice. Journal of Applied Corporate Finance, 18(4), 8-20.
  • Varma, V. (2007). Risk management in financial institutions. McGraw-Hill Education.
  • Hillson, D., & Murray-Webster, R. (2017). Understanding and managing risk attitude. Routledge.
  • ISO. (2018). ISO 31000:2018 Risk management — Guidelines. International Organization for Standardization.
  • Fannie Mae. (2022). Risk Management Report. Retrieved from https://fanniemae.com

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