Question

Explain how the classification of risks into categories such as ‘high’, ‘medium’ or ‘low’, helps entities manage their businesses

Answer 1

Step-by-step explanation:

Classification of the customers is done under three risk categories viz. low, medium, and high. Customer’s identity, Social/financial status, Nature of business activity, Information about the client’s business and their location, etc. are some of the parameters in the risk assessment strategy of the financial institutions.