Indian Journal of Science and Technology

Abstract

Background: The article substantiates the low level of effectiveness of the risk management system in the banks of the Republic of Kazakhstan. In this regard, the study was aimed at developing a model for implementation of the integrated risk management system in the banking sector of Kazakhstan in accordance with international standards. Method: To achieve the research objectives based on the structural and logical modeling the blocks of interrelated sequential processes have been formed in accordance with IDEF0 methodology for implementing an integrated risk management system in the second-tier banks of Kazakhstan. Each IDEF0 block represents a process stage of integration of the risk management system in the national banks on the basis of ISO 31000. The interface arrows between the process blocks of risk management system integration stages are justified by expertise in compliance with international standards, reflecting the functional task of each of them. Findings: The study presents a new approach to the bank security system. In contrast to the existing modern concepts of banking risk management the proposed approach allows creating a model of risk management system integration into the overall bank management system adapted for Kazakhstan national practice. The sequence of stages for implementing an integrated risk management system in the practice of banks of Kazakhstan is argued: changing the concepts of risk and management in accordance with ISO 31000, defining the risk management objectives and problems, forming the risk management system, creating the risk management process, evaluating the maturity of the risk management system, developing a plan for implementation of the integrated risk management system project. A distinctive feature of the adaptive model is to ensure the formation of a concept of integration of the in the RK second-tier banks’ risk management system, which conforms to international standards. The model is based on the benefits of ISO 31000 risk management requirements and the prospects of its implementation in the security system of the national banks. It is characterized by the approach comprehensiveness, the possibility of continuous improvement, ease of use and consistency of implementation. It generates a new risk-management culture within the overall system of bank management, not limited by one component of the managerial mechanism. It causes an increase in the competitiveness of the banks and also helps to increase the level of their economic security. Improvements: The presented approach promotes structuring and consistency in decision-making on risk management in banks and can be used in the process of developing the concept of integrated risk management system in the practice of second-tier banks of Kazakhstan. 

Keywords: Banks’ Integrated Risk Management System, Bank Security, Kazakhstan Banking Sector, ISO 31000 Risk Management Standard