Ensuring Financial Stability Through Effective Organization of Risk Management in Commercial Banks

Аннотация

This article discusses the economic nature of COPYRIGHT risks in commercial banks, the reasons for their © 2025 Original content from this work may be used under the terms emergence, and their consequences. It presents the of the creative commons attributes 4.0 License. views of economists on the economic content of risks in commercial banks. The types of banking risks and the organizational structure of their management are elaborated. Proposals for improving the risk management mechanism in commercial banks have been developed. Keywords: Commercial banks, risks, currency, credit, interest rate, investment, securities, national economy, financial instruments. Introduction: In the context of modern market relations, commercial banks occupy a significant position as leading components of the economy and play a crucial role in implementing the state’s monetary and credit policies. By regulating the movement of capital flows, commercial banks contribute to the effective use of financial resources in society. It is well known that commercial banks operate under high-risk conditions. Typically, banks exposed to high levels of risk are believed to have the potential to generate higher profits. Evaluating the performance of commercial banks is one of the complex tasks. Effective risk management is essential for ensuring the long-term success and stability of a bank. It should be noted that in recent years, numerous reforms have been implemented in the banking practice of our country to improve the scientific and practical aspects of risk management in commercial banks. This has led to the development of specific mechanisms for managing risks in commercial banks. The American Journal of Management and Economics Innovations 107 https://www.theamericanjournals.com/index.php/tajmei The American Journal of Management and Economics Innovations In particular, the “Development Strategy of New conditions—remain one of the major issues faced by Uzbekistan for 2022–2026” identifies ensuring companies. The main types of risks common to all financial stability in the banking system as a priority companies include liquidity, credit, market, and other task. With the support of the International Monetary non-financial risks. Fund, practical measures are being taken to develop Financial risks for commercial banks typically involve stress test models aimed at identifying potential unexpected changes or fluctuations in profit. According threats in the economy and assessing their impact on to international practice, there are many types of the stability of the banking system. Accordingly, the financial risks in banking, all of which negatively impact Central Bank of the Republic of Uzbekistan adopted the bank’s financial performance. Resolution No. 4/11 on March 7, 2023, which approved The term “financial risk” is a general concept that the “Regulations on Requirements for the Risk includes various risks related to financing, including Management System of Banks and Banking Groups.” financial operations associated with corporate default This Regulation outlines the requirements for the risk risks. These risks mainly arise from the volatility of management systems of banks and banking groups. assets and the potential decline in the stock market, Clearly, the development of risk management often linked to debt obligations and imbalances mechanisms in commercial banks based on between current assets and liabilities. international best practices is among the urgent issues. The impact of credit risks in commercial banks exceeds Commercial banks use various tools and methods to that of other types of risks. This is due to the high manage risks, including risk assessment, risk mitigation proportion of loans in the total assets of commercial strategies, risk monitoring, and reporting. By banks; the non-repayment of issued loans reduces bank identifying potential risks and implementing liquidity; and the untimely and incomplete repayment appropriate controls, commercial banks can reduce of loans leads to a decrease in interest income, which the likelihood of adverse events affecting their negatively affects the financial stability of banks. financial operations. The risk management strategy should align with the Poor risk management can result in financial losses, company’s development strategy. It should support the reputational damage, regulatory sanctions, and even company’s mission and vision and reflect its core values bank failure. Therefore, it is essential for commercial and risk appetite. If not, banks may fail to achieve their banks to have robust risk management systems in mission and vision. A misaligned strategy increases risk place to protect stakeholders and ensure their ongoing for stakeholders as it may impact the company’s value success. and reputation. LITERATURE REVIEW To evaluate and reduce the impact of risks on bank Numerous studies by domestic and foreign economists income, it is essential to classify risks based on di