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Operations/Credit Card Risks

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I need some help getting started on the following scenario:

You are hired as the director of credit card operations for Western Bank. Explain to the board of directors the primary risks involved with a credit card operation and ways to deal with those risks. Be sure to address the following in your report:

- Credit risk
- Transaction risk
- Liquidity risk
- Interest rate risk

- Is it a good idea of the bank to assess the risk of credit cards? Why or why not? How does a bank know if it can afford to take these risks?
- What are the potential benefits to banks?

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Solution Summary

The expert examines operations and credit card risks. The potential benefits to bank are determined.

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Before assigning credit to someone, Western Bank must consider the 5 C's of Credit: the capacity to pay, collateral should the loan go in default, your character based on your payment history according to your credit report, the amount of capital or cash available should you need money quickly to pay on the loan, and the conditions, usually, working conditions to ensure a ...

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  • Doctorate of Management in Organizational Leadership, University of Phoenix - Online
  • MBA, Webster Univeristy
  • Dual BS Degrees, University of South Carolina
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