Risk Management in Banking

The global financial crisis revealed the failure of central banks, finance ministries and financial regulatory authorities in the advanced economies to detect and address systemic risks that had been building up in the financial sector since the early 2000s. The generally benign economic environment – positive growth and low inflation -- contributed to supervisors’ focusing on controlling risks in individual financial institutions rather than looking for signs of overall risk.

The last decade has been quite eventful for the banking sector in emerging Europe. In Central and Eastern Europe, loan growth has been extraordinarily high at the beginning of
the century, fuelled by easy access to international funding, in the context of huge opportunities for local market development. This period ended with the outbreak of the

In the financial sector, where USAID has been the premier donor organization supporting the Europe and Eurasia (E&E) region’s transformation and development for the past two decades, there is important unfinished business. Since the fall of the Berlin Wall, the E&E region has undergone dramatic economic and political transformation. The extent of progress in economic development, democratic reforms, regional cooperation, and integration into global economic and financial markets has been remarkable.