Credit Risk Exposure: The bank faces the risk of losses arising from the failure of borrowers, counterparties, or obligors to meet their financial obligations, impacting its loan portfolios and other credit-sensitive assets.

Interest Rate Fluctuations: Changes in market interest rates can negatively affect the bank's net interest income by altering the spread between interest earned on assets and interest paid on liabilities, as well as impacting the valuation of financial instruments.

Economic Downturn Impact: Adverse economic conditions, such as recessions, high inflation, or unemployment, can lead to increased loan defaults, reduced client activity, and declines in asset values, negatively impacting the bank's profitability and capital.