We have to ensure that the introduction of new risk instruments actually increases the risk management capabilities of the system as a whole, and not the other way round because of inadequate preparation. Reflections on risk management at RBI The Reserve Bank of India, like all other central banks is also a financial institution that is exposed to a variety of risks.
Over the last several years, there has been a structural transformation of the risk exposure of the RBI in that as against pre-dominantly rupee-denominated assets figuring on its balance sheet, it now has an overwhelming proportion of assets denominated in major foreign currencies. This transformation means more volatility in its asset valuation in rupee terms as also in the current earnings in rupee terms.