Following 2007-2009 financial crisis, there has been observed constant waves of financial regulations across the world, nationally and trans-nationally. Among various issues being regulated and re-regulated, risk management in banking organizations draws special attention by the financial regulators. At international level, BIS has promulgated various principles and guidance on risk management of banks, ranging from governance structure, risk culture, and general risk management framework to various specific mechanisms targeted at different risk exposures. At the regional and national level, new legal acts and laws are prescribed to enhance banks’ risk management, as exemplified by CRD IV in EU and Dodd-Frank Act in US. And these lead to the questions of how risk management is arranged in the framework of new round financial regulations, transnational or national? Is there a convergence or divergence of risk management across different countries? In cases of a convergence or divergence, how is the risk management structured in banks in different national configurations? And what are key factors contributing to such convergence or divergence of risk management of banks?
With a multiple research method, the present study finds that risk management in banking organization illustrates great differences due to varied institutional settings, though convergence of some kind is emerging. The study shows, on one side, there is some consistency of risk management in bank institutions across different countries due to constant international efforts and intertwining of different financial markets. On the flip side, empirical evidence shows that differences are prominent on risk management of banks in varied countries, as illustrated by in-depth elaboration on key issues such as risk appetite, risk management priorities, and specific risk management mechanisms. The study further reveals that the specific national institutional settings can play a dominant role in producing and reproducing risk management arrangement in banking organizations.
