A PROPOSED FRAMEWORK FOR INCLUDING ENVIRONMENTAL RISKS WITHIN THE DETERMINANTS OF CALCULATING CAPITAL ADEQUACY IN BANKS

Basel III has directed banks to manage the significant risks associated with their activity. Banks and Basel III have focused on managing both credit, market, operational and liquidity risks as the most common risks in the banking industry. Banks have therefore set up appropriate capital to counter these types Of risk, to be capital as the first line of defense to absorb any losses resulting from exposure to banking risks.

Despite the diversity of environmental risks associated with the banks' activity as well as the increase in their effects, which amounted to direct losses only in 2011 about 400 billion dollars, for a number of not more than 1,600 accidents or environmental disaster only according to the study prepared by the World Bank (2013 Building resilience) . However, the decisions of the Basel III Committee did not take these risks into consideration when issuing their regulatory instructions to banks.
The objective of the research is to clarify the nature of the environmental risks associated with the Bank's activity and associated environmental losses, while providing a proposed framework for including environmental risks within the parameters of calculating the capital adequacy standard in banks and in accordance with the general framework of risk management in banks. The search for questions answered the nature of the environmental risks associated with the activity of banks and to what extent banks are calculating capital to face environmental risks.
Data collection was based on the use of a questionnaire questionnaire that was directed to the sample of the study from managers and officials of risk departments in commercial banks operating in the Arab Republic of Egypt. A total of 50 completed questionnaire forms were received. The data were analyzed through the use of the statistical packages for social studies (SPSS). The first hypothesis of the research, which stated that there is no awareness among the Egyptian commercial banks of the environmental risks associated with the Bank's activity, was not true. The second hypothesis states that "the environmental risks associated with the Bank's activity are not included in the bank's capital adequacy criterion" .
The research has reached a number of results, the most important of which are the awareness of the risk managers in the Egyptian commercial banks of the environmental risks associated with the Bank's activity, as well as the absence of existing environmental risk management systems in banks. The study also presented a set of recommendations, the most important of which is the documentation of policies and procedures for environmental risk management controls, the formation of suitable capital to meet the environmental risks related to the bank's activity, so that it is the first line of defense to bear any environmental losses.