Risk management in financial institutions has grown in importance over the past five decades. This has become necessary to ensure the soundness and stability of the financial system which has become interconnected. An important innovation aimed at ensuring effective financial risk management and (later) convergence towards a common financial risk management practice has been the establishment of the Basel Committee on Banking Supervision (BCBS). The BCBS was established in 1974 by the Group of Ten countries in response to disruptions in international financial markets. The market had witnessed the collapse of the Bretton Woods system of managed exchange rates in 1973 and the Franklin National Bank of New York in 1974 as well as other events. The BCBS has the mandate to strengthen the regulation, supervision and practices of banks in member countries with the purpose of enhancing financial stability (BCBS, 2013). Since 1975, the BCBS occasionally publishes regulations for which banks in member countries1 subscribe. Market risk has been an important aspect of the institutions regulatory framework since 1996.

Mr. James Adjei Barimah is an Investment Strategist. He holds a Global MBA degree in Corporate Finance from the University of Bologna Business School in Italy and MA in Quantitative Finance from the University of Warsaw in Poland.