Merchant banking involves underwriting, corporate advisory, and investment activities that expose institutions to a complex array of financial and operational hazards. Primary risks include underwriting risk, where the bank guarantees the purchase of securities during an initial public offering or bond issuance but fails to sell them to the public, resulting in substantial capital lock-up and potential loss if market prices drop. Additional hazards encompass credit risk from bridge loans extended to corporate clients, market volatility affecting equity investments, reputational damage from failed advisory deals, and stringent regulatory compliance mandates governing corporate governance and conflict of interest management.