3. The process of risk management 2 Different companies have different risk exposures, and their risk management approach is customized to the type of risk the company is exposed to. Consider the case of Trident Bank \& Trust. Trident Bank \& Trust (TB\&T) is a large financial institution whose deposits and loans are received and made across the west. With deposits in excess of $1.5 billion, 1,258 branch offices, and 1,769 kiosks in shopping malls and grocery stores in the west, along with correspondent and operational relationships with all the top-20 Asian and European banks, TB\&T is considered to be one of the strongest financial institutions in the western United States. Ralph Thomas, TB\&T's chief risk officer (CRO), has the responsibility of preparing and overseeing TB\&T's risk management strategy and monitoring its implementation. In preparing for his presentation and question-and-answer session during the company's annual shareholders' meeting, his staff assembled the statements that appear in the following table. Help Mr. Thomas prepare for the meeting by indicating whether each of the following statements is true or false. Statement An example of a risk facing TB\&T is the foreign exchange risk associated with receiving deposits, making loans, paying bills, and purchasing services from its international banking partners in Asia and Europe. An important part of the company's enterprise risk management framework is determining the company's risk appetite. TB\&T borrows funds using fixed-rate deposits and variable-rate securities and makes variable- and fixed-rate loans. These activities create interest rate risks for the bank; unfortunately for TB\&T, there are no methods that manage these risks. TB\&T's loan portfolio gives rise to several different types of risk. One method that TB\&T can use to reduce these risks is to limit the volume and manage the quality of its loans in a given geographical area or in a given industry