For this assignment, you will write a three to four page research paper in which you describe an RAROC system for risk management and identify benefits and challenges of an RAROC system. In this paper, please address the following questions:
How would you define and describe a risk management system?
How would a risk management system differ for a bank/investment firm compared to a construction firm that has high risk investments?
Describe your firm’s current RAROC system?
What are the benefits and challenges of an RAROC system?