I want some assistance in getting started on the given scenario:
You are hired as the director of credit card operations for Western Bank. Explain to the board of directors the primary risks involved with a credit card operation and ways to deal with those risks. Be sure to address the following in your report:
- Credit risk
- Transaction risk
- Liquidity risk
- Interest rate risk
- Is it a good idea of the bank to assess the risk of credit cards? Why or why not? How does a bank know if it can afford to take these risks?
- What are the potential benefits to banks?