Understanding the structure of commercial banks and the services/products that they provide is essential for the successful leadership of any commercial enterprise. While fundamental knowledge of the industry as a whole is important, it is equally crucial to assess the risk profile of counter-parties to ensure that appropriate steps have been taken to mitigate this risk as much as possible.

To understand the risk associated with corporate banking activities more, prepare a written response to the following questions:

• What is meant by off-balance sheet activity?
• What specific types of off-balance sheet items would you expect for commercial banks?
• How does an off-balance sheet item move onto the balance sheet?
• How do you assess the risk of off-balance sheet items?