A type of general reserve (statutory reserve) that a bank creates, for risk coverage purposes, by appropriations from net profits (statement of income, profit or loss). In other words, the amount of the general risk reserve is charged to the income statement (as a tax deductible expense).

This reserve aims to cover or absorb unidentified risks in a bank’s operations and activities.

For a bank or any other types of regulated entities, general risk reserves are a component of core capital (tier-1 capital). General risk reserve is a type of reserve capital.