Risk management in banking sector: The case of Turkey

The aim of this study is to establish the place where the Turkish banking sector is now in risk management using reports as BDDK reports, Basel reports etc. and researchs, to give an opinion about Basel III, to give an example especially of extreme values method in order to resolve of the lack of explanatory examples in this method and to provide a general overview of credit and operational risk applications. In this study, market risks, credit risks and operational risks were calculated. Different amounts of VaR for the market risk, were calculated via historical simulation method and extreme values method, we have achieved different results and compared them. We have also obtained two credit risk results, for a bank operating in Turkey and also for its financial institutions, via the capital adequacy standard ratio tables and we have compared the obtained results. And finally, we have calculated the operational risk amount for the same bank operating in Turkey using method of "Basic Indicator".As a result, when we look at the values found in the calculation of the market risk VaR, the largest VaR for every three asset, was calculated by extreme values method. Value exposed to credit risk, as expected, is far larger than operational risk amount. And it was determined that the majority of the credit risk was due to the bank itself rather than the bank financial institutions.