Risk Assessment for Canadian Commercial Banks

Abstract

More and more individuals, businesses, and financial institutions are realizing the importance of risk management, and it is also an integral part of the development process for commercial banks. Most people do not consider the significant risks that banks face when conducting transactions and that this is a key factor in the survival of the bank. Therefore, this paper examines how Canadian commercial banks manage risks and explores the objective causes of increased risk by collecting annual data from Toronto-Dominion Bank (TD) and comparing and analyzing it with the data of previous years. The comparison of selected data continues with an analysis of the ability of commercial banks to manage risks and how risks affect the profitability of the bank. The study finds that liquidity risk is positively correlated with the bank's profitability and performance, while market risk and credit risk have a negative correlation with the bank's performance. External factors such as inflation, interest rate hike, and COVID-19 also challenges the bank with increased risk. TD has a well-developed regulatory system and countermeasures, and the bank has a high level of risk management and response capabilities.