What are the different risks in Banks? Explain in detail how the Bank Treasury plays a significant role in managing these different risks in a Bank.

Banks face various types of risks that can impact their stability, profitability, and overall operations. Understanding these risks is crucial for effective strategic management. The primary risks in banks include credit risk, market risk, liquidity risk, operational risk, and interest rate risk.

Credit risk arises when borrowers fail to repay their loans, leading to financial losses for the bank. This is one of the most significant risks because the core function of banks involves lending money. Market risk involves losses due to fluctuations in market prices, including interest rates, foreign exchange rates, and equity prices. Liquidity risk occurs when a bank cannot meet its short-term financial obligations due to the unavailability of cash or liquid assets. Operational risk includes risks arising from failures in internal processes, people, systems, or external events such as fraud or natural disasters. Interest rate risk happens when changes in interest ___ __________ _____ _____ _________ ___.
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