The risks that financial institutions are faced with arise from business operations as well as from the environment in which these financial institutions operate. One of the objectives of financial institutions in their business operations is to realize greater profit, or at least to realize the same level of profit, with a minimum level of risk. It is not possible for financial institutions to entirely avoid risks, however it is necessary to identify these risks in due time. The adequate method of risk management can help financial institutions to reduce these risks or eventually remove them. The most frequent types of risks financial institutions deal with are the following: credit risk, interest rate risk, currency risk, liquidity risk and operational risk. These risks require the use of different risk management methods that depend on the type of risk. The most significant risk in Croatia is credit risk, while other types of risks are closely related to it. The Currency risk is also of great importance since most loans are approved with the foreign currency clause in Euros. It is important to adequately manage all the risks mentiond that financial institutions could do their business in a secure manner.