Banking Risk Management and Financial Stability: A Conceptual Review

Abstract

Banking risk management has become a central concern in the post-global financial crisis era, as banks face increasing exposure to credit, market, liquidity, and operational risks amid heightened economic uncertainty. This study aims to provide a conceptual synthesis of banking risk management by examining its scope, objectives, and implications for financial stability. Drawing on recent theoretical and review-based literature, the paper discusses how risk management frameworks function not only as technical control mechanisms but also as strategic tools that support bank resilience and long-term sustainability. The analysis highlights the evolving role of governance structures, regulatory oversight, and integrated risk approaches in shaping banks’ ability to absorb shocks and maintain stability. By organizing existing studies into a coherent conceptual narrative, this paper identifies key gaps in the literature, particularly the dominance of single-risk perspectives and the limited integration between risk management practices and broader stability outcomes. The study contributes to the banking risk literature by offering a structured overview that can serve as a foundation for future empirical and policy-oriented research. Overall, the paper emphasizes the importance of comprehensive and forward-looking risk management frameworks in safeguarding the stability of banking systems in an increasingly complex financial environment.