Explain the risk characteristics of a bank and discuss the role of management control system in containing these risks. 

Banks are financial intermediaries that accept deposits from customers and lend funds to borrowers. As such, banks are exposed to various risks, including credit risk, market risk, liquidity risk, and operational risk. In order to manage these risks, banks use management control systems.

Credit risk is the risk that a borrower will default on a loan. Banks manage credit risk by evaluating the creditworthiness of borrowers before making loans, setting limits on exposure to individual borrowers, and monitoring the performance of loans. Management control systems play a key role in managing credit risk by providing information on the creditworthiness of borrowers, monitoring loan performance, and enforcing loan covenants.

Market risk is the risk that the value of a bank's assets will decline due to changes in interest rates, exchange rates, or other market factors. Banks manage market risk by using hedging strategies and by diversifying their portfolios. Management control systems play a key role in managing market risk by providing information on market trends and by monitoring the performance of hedging strategies.

Liquidity risk is the risk that a bank will not have sufficient cash or liquid assets to meet its obligations. Banks manage liquidity risk by maintaining adequate reserves of cash and liquid assets and by monitoring their cash flows. Management control systems play ___ __________ __________ ________ _________ __________ _____.
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