Banks' management of credit risk should help them withstand shocks, says S&P

The global banking industry is generally strong and able to deal with sudden shocks because of its improved risk management, according to research by rating agency Standard & Poor's.

Introducing the agency's new banking industry country risk assessments, Standard and Poor's analysts Scott Bugie, John Chambers and Ryan Tsang wrote: "The global financial system is in rude health in 2006... risk charges for loan losses are low, profits are high and business flows robust."

Although developed economies remain vulnerable to a sudden rise in interest rates, or another shock such as a widening of credit spreads, a fall in the dollar, or a further rise in energy prices, their banks