Mitigating Banking Risks by Streamlining the Internal Control System. Summary of the PhD thesis in Economics

Abstract

Mitigating banking risks is a professional and academic issue, particularly considering the numerous financial scandals and economic crises around the world. Unfortunately, existing internal control systems have failed to identify and prevent the full range of problems in risk management, a fact most clearly demonstrated by the banking crisis in the Republic of Moldova during 2014–2015, which was triggered by banking fraud. Thus, for the banking sector of the Republic of Moldova, the primary motivation for analyzing the internal control system and identifying its implications for risk management is precisely this banking crisis, which demonstrated that risks materialize when banks have a control system that is functional only on the surface. Growing uncertainties and emerging risks have put pressure on banking institutions, forcing them to adopt appropriate internal measures to mitigate them. In today’s environment, internal controls are considered an essential tool for risk management and fraud prevention in the banking sector.