Profit Risk Management

Profit Risk is a risk component that is different from credit or ALM risk in that it looks specifically at the income statement, and not the balance sheet, in an altogether different way. This new piece of the risk management equation has been overlooked, and the lack of management of the risk embedded in the income statement, has hurt the industry in profound ways. Without a sustainable income statement, a bank or credit union cannot ensure its long-term viability and it becomes susceptible to a meltdown scenario.