A

PROJECT ON
RISK MANAGEMENT IN BANKS
SUBMITTED TO
THE UNIVERSITY OF MUMBAI
IN PARTIAL FULFILLMENT FOR THE AWARD OF
THE DEGREE OF BACHELOR OF COMMERCE
(BANKING AND INSURANCE)
SEMESTER V
(SEAT NO:1150841 )

BY
SIDDHESH SANJEEVKUMAR SWAMI
THE S.I.A COLLEGE OF HIGHER EDUCATION
2015-2016

DECLARATION BY THE RESERCH STUDENT

I hereby declare that this project titled RISK MANAGEMENT IN BANK
OF MAHARASHTRA. Submitted by me is based on actual work carried out by
me under the guidance and supervision of MR.MAHESH KANDALKAR.
Any reference to work done by any other person or institution or any
material obtained from other sources have been duly citied and reference.
It is in future to state that this work is not submitted anywhere else for any
examination.

SIGNATURE OF STUDENT

(SIDDHESH SWAMI)

ACKOWLEDGEMENT
I am thankful to Professor MR. MAHESH.G.KANDALKAR for his
valuable guidance in successful completion of this project.
My over riding debt due to our Principal MRS. Dr. PADAMAJA ARVIND MAM
and librarian MRS.BHARATI RAO MAM.
Last but not the least I cannot forget my friends and my parents whose
constant encouragement and support made this task a happy job.

SIGNATURE

SIDDHESH SANJEEVKUMAR SWAMI

(THIRD YEAR BACHELOR OF COMMERCE)
(BANKING AND INSURANCE)

The SIA College Of Higher Education.

P88, MIDC Residential Area Dombivli Gymkhana Road,
Near Balaji Mandir, Dombivli (East). 421 203.
Email:

sia.college@yahoo.com

CERTIFICATE
This is to certify that,
Mr. SIDDHESH SANJEEVKUMAR SWAMI Student of BCOM (Banking
and Insurance V) 2014-2015
Seat No.has successfully completed his Project
Work on RISK MANAGEMENT IN BANK OF MAHARASHTRA under
the guidance of PROF.MR. MAHESH.G.KANDALKAR as per Mumbai
University syllabus.

COURSE CO-ORDINATOR

EXTERNAL EXAMINER

PROJECT GUIDE

PRINCIPAL

INDEX
SR.N

TOPIC

O
1

CHAPTER 1
INTRODUCTION:
1: Importance of study
2: Main objectives of study
3: What is Risk?
4: Types of risk
5: Risk Management
6: Implementation of risk management
7: Risk management Strategy
8: Principles of risk management
9: Risk management process
10; Introduction to BANK OF MAHARASHTRA
11: Risk management practices in BANK OF MAHARASHTRA
CHAPTER 2
REVIEW OF RELTED LITRATURE
1: Introduction
2: Review of books
3: Benefits of relevant study

CHAPTER 3
RESEARCH AND METHODOLOGY
1: Introduction
2: Research design and its need
3: Research methodology

PAGE NO

4; Methodology of present study

5: Tools of research
6: Questionnaire
7: Tools preparation
4

8: Conclusion
CHAPTER 4
DATA ANALYSIS AND INTERPRETATION
1: Introduction
2 : Managers question
3 : Suggestions for Bank of Maharashtra

5.

CHAPTER 5
SUMMARY FINDING RECOMENDATION AND
CONCLUSION
1: Conclusion
2 : Bibliography
3 : Appendix I
4 : Questionnaire

CHAPTER 1
INTRODUCTION

Importance of study:-

Importance of study:The project helps in understanding the clear meaning of

Risk Management in bank of Maharashtra. It explain
about the credit risk, market risk and operational risk
scoring and Rating of the Bank.
By the analysis of Risk management in Bank of
Maharashtra we get to know about different types of risks
involved in a bank and the Importance of Risk
Management in todays Banking Sector in India its scope
and growth. To find out the Risk Management policies of
Bank of Maharashtra and how they are successfully
implementing to tackle various problems. Research
methodology to be used for primary and secondary data
to be collection. Though the Risk Management in Bank of
Maharashtra is very wide and elaborated, still the project
covers whole in concise manner.

Main objectives of study: To study broad outline of management of credit,

market and operational risks associated with Bank of
Maharashtra.
To understand the importance of risk management in
Bank of Maharashtra.
To study problem related to risk management in Bank
of Maharashtra.
To study aims at learning the techniques involved to
manage the various types of Risk of Bank of
Maharashtra.

WHAT IS RISK? :Meaning:Risk is part of every human endeavor. From the moment
we get up in the morning, drive or take public
transportation to get to school or to work until we get
back into our beds (and perhaps even afterwards), we are
exposed to risks of different degrees. What makes the
study of risk fascinating is that while some of this risk
bearing may not be completely voluntary, we seek out
some risks on our own (speeding on the highways or
gambling, for instance) and enjoy them. While some of
these risks may seem trivial, others make a significant
difference in the way we live our lives. On a loftier note, it
can be argued that every major advance in human
civilization, from the cavemans invention of tools to
gene therapy, has been made possible because someone
was willing to take a risk and challenge the status quoin
this chapter, we begin our exploration of risk by noting its
presence through history and then look at how best to
define what we material with the lose the chapter by
restating the main theme of this book, which is that
financial theorists and practitioners have chosen to take
too narrow a view of risk, in general, and risk
management, in particular. By equating risk management
with risk hedging, they have underplayed the fact that
the most successful firms in any industry get there not by
avoiding risk but by actively seeking it out and exploiting
it to their own advantage .A Very Short History of Risk For

much of human history, risk and survival have gone hand

in hand. Prehistoric humans lived short and brutal lives,
as the search for food and shelter exposed them to
physical danger from preying animals and poor weather.

Definition:DEFINITION of 'Risk'
The chance that an investments actual return will be
different than expected. Risk includes the possibility of
losing some or all of the original investment. Different
versions of risk are usually measured by calculating the
standard deviation of the historical returns or average
returns of a specific investment.
A high standard deviation indicates a high degree of risk.
Many companies now allocate large amounts of money
and time in developing risk management strategies to
help manage risks associated with their business and
investment dealings. A key component of the risk
management process is risk assessment, which involves
the determination of the risks surrounding a business or
investment.

Types of risk :Risk faced by the bank can be segmented into three
separated typed from the management perspective viz.
a. Risks that can be eliminated or avoided by simple
business practices
b. Risks that can be transferred to other business
participants (eg. Insurance policy) and
c. Risks that can be actively managed at the bank level.
Risk is any real or potential event, action or omission,
internal or external, which will have an adverse impact on
the achievement of Banks defined objectives. Risk is
inherent in every business. Risk cannot be totally
eliminated but is to be managed. Risks are o be
categorized into high risk, medium risk, and low risk and
then managed.

Risks can be classified in to three broad categories:1. Credit Risk

2. Market Risk (Insurance rate risk, Liquidity Risk)
3. Operational Risk

1.

Credit Risk

Credit risk is defined as the possibility of losses

associated with diminution in the credit quality of
borrowers or counter parties. In a banks portfolio, losses
stem from outright default due to inability or
unwillingness of a customer or counter party to meet
commitments in relation to lending, trading, settlements
and other financial transaction. Credit risk emanates from
banks dealing with individuals, corporate, bank, financial
institution or a sovereign.
Credit Risk may take the following forms:
In case of direct lending; principal/and or interest
amount may not be repaid.
In case of treasury operation; the payment or series
of payments due from the counter parties under the
respective contracts may not be forth coming or
ceases.
In case of securities trading businesses; fund /
securities settlement may not be effected.
In case of cross-border exposure; the availability and
free transfer of foreign currency fund may either
cease or restrictions may be imposed by the
sovereign.

2.

Market Risk

Market risk may be defined as the possibility of loss to a

bank caused by changes in the market variables. Market
Risk is the risk to the banks earnings and capital due to

changes in the market level of interest rates of prices of

securities, foreign exchanges and equities, as well as the
volatilities of those prices.
Segments of Market Risk
Liquidity Risk
The risk that the group cannot meet its obligations when
they fall due without incurring substantial costs in the
form of expensive refinancing or the need to sell assets.
Interest rate risk
Interest rate risk is the risk where changes in market
interest rate might advertise affect a banks financial
condition. The immediate impact of changes in interest
rates is on the Net Interest Income.

3.

Operational Risk

Operational risk is the risk of direct or indirect loss

resulting from inadequate or failed internal processes,
people and systems or from external events. Internal
process include activities relating to accounting,
reporting, operations, tax, legal, compliance and
personnel management etc.
Broadly the following can be grouped under Operational
Risk
1. Internal fraud.

2. External fraud.
3. Non adherence of system and procedures.
4. Poor documentation.
5. Business disruption due to Computer System failure.
6. Lack of succession planning.
7. Failure of customer due diligence.

Risk management :Meaning:Risk management refers to the practice of identifying

potential risks in advance, analyzing them and taking
precautionary steps to reduce/curb the risk.
When an entity makes an investment decision, it exposes
itself to a number of financial risks. The quantum of such
risks depends on the type of financial instrument. These
financial risks might be in the form of high inflation,
volatility in capital markets, recession, bankruptcy, etc.
So, in order to minimize and control the exposure of
investment to such risks, fund managers and investors
practice risk management. Not giving due importance to
risk management while making investment decisions
might wreak havoc on investment in times of financial

turmoil in an economy. Different levels of risk come

attached with different categories of asset classes.
For example:- a fixed deposit is considered a less risky
investment. On the other hand, investment in equity is
considered a risky venture. While practicing risk
management, equity investors and fund managers tend
to diversify their portfolio so as to minimize the exposure
to risk.

Definition:In the world of finance, risk management refers to the

practice of identifying potential risks in advance,
analyzing them and taking precautionary steps to reduce
the risk.

How risk management is done in

banks..?
Risk management in Indian banks is a relatively newer practice,
but has already shown to increase efficiency in governing of these
banks as such procedures tend to increase the corporate
governance of a financial institution. In times of volatility and
fluctuations in the market, financial institutions need to prove their
mettle by with standing the market variations and achieve
sustainability in terms of growth and well as have a stable share

value. Hence, an essential component of risk management

framework would be to mitigate all the risks and rewards of the
products and service offered by the bank. Thus the need for an
efficient risk management framework is paramount in order to
factor in internal and external risks.
The financial sector in various economies like that of India are
undergoing a monumental change factoring into account world
events such as the ongoing Banking Crisis across the globe.
The2007present recession in the United States has highlighted
the need for banks to incorporate the concept of Risk
Management into their regular procedures. The various aspects of
increasing global competition to Indian Banks by Foreign banks,
increasing Deregulation, introduction of innovative products, and
financial instruments as well as innovation in delivery channels
have highlighted the need for Indian Banks to be prepared in
terms of risk management.
Indian Banks have been making great advancements in terms of
technology, quality, as well as stability such that they have started
to expand and diversify at a rapid rate. However, such expansion
brings these banks into the context of risk especially at the onset
of increasing Globalization and Liberalization. In banks and other
financial institutions, risk plays a major part in the earnings of a
bank. The higher the risk, the higher the return, hence, it is
essential to maintain a parity between risk and return. Hence,
management of financial risk incorporating a set systematic and
professional methods especially those defined by the Basel II
becomes an essential requirement of banks. The more risk
averse a bank is, the safer is their Capital base.

Implementation a risk management

Risk Management is not about red tape. Its about protecting

staff, members and visitors from injury or death, as well as
protecting your organization from legal liability, high
insurance costs and reputational damage.
All not-for-profit groups are exposed to a number of risks
simply by virtue of the nature of the activities that they
undertake.
Its your responsibility to do everything in your power to
ensure that people and property closely related to our group
are properly protected. The fact that many of the people are
talking about are volunteers who give freely of their time
makes this even more of a priority.

Risk Management Strategy

Risk Management Strategy is an integral business process that
incorporates all of the Risk Management processes, activities,
methodologies and policies adopted and carried out in an
organization.
The Risk Management Strategy sets the parameters for the
entire Risk Management and is usually released by the executive
management of an organization .
As depicted in the diagram of The Risk Process, Risk
Management Strategy consists of two processes ,one setting the
framework for the entire Risk Management and the other setting
the communication channels in the organization.

Principles of risk management

Principles of risk management

The International Organization for Standardization (ISO)
indentifies the following principles of risk management:

Risk management should:

create value resources expended to mitigate risk should be
less than the consequence of inaction , or (as in value
engineering ) ,the gain should exceed the pain
be integral part of organizational process
be part of decision making process
explicitly address uncertainty and assumptions
be systematic and structured process
be based on the best available information
be tailorable
take human factors into account
be transparent and inclusive
be dynamic, iterative and responsive to change
be capable of continual improvement and enhancement
be continually or periodically re-assessed

Risk Management Process

The process of financial risk management is an ongoing

one. Strategies need to be implemented and redefined as
the market and requirements changes. Refinements may
reflect changing expectations about market rates,
changes, for example; in general, the process can be
summarized as follows:

 Identify and priorities key financial risks.

Determine an appropriate level of risk
tolerance
Implementing risk management strategy in
accordance with policy.
Measure, reports, monitor, and refine as
needed.
Risk management needs to be looked at as an
organizational approach, as management of risks
independently cannot have the desired effect over the
long term. This is especially necessary as risks result from
various activities in the firm and the personnel
responsible for the activities do not always understand
the risk attached to them. The steps in risk management
process are:

1. Determining objective :
Determining objective is the first step of risk
management function. The objective may be to protect
profits or to develop competitive advantage. The
objective of risk management needs to be decided upon
the management. So that the risk manager may fulfil his
responsibilities in accordance with the set objective.

Determining objective is the first step of risk

management function. The objective may be to protect
profits or to develop competitive advantage. The
objective of risk management needs to be decided upon

the management. So that the risk manager may fulfil his

responsibilities in accordance with the set objective.

2. Identifying Risks:
Every organization face different risks, based on its
business, the economic, social and political factors, the
features of the industry it operates in - like the degree of
competition, the strengths and weakness of its
competitors, availability of raw material, factors internal
to the company like the competence and outlook of the
management, state of industry relations, dependence on
foreign markets for input, sales or financiers, capabilities
of its staff and other innumerable factors.

3. Risk Evaluation:
Once the risks are identified, they need to be evaluated
for ascertaining their significance of a particular risk
depends upon the size of the loss that it may result in,
and the probability of the occurrence of such loss. On the
basis of these factors, the various risks faced by the
corporate need to be classified as critical risks, important
risks and not-so-important risks. Critical risks are those
that may result bankruptcy of the firm. Important risks
are those which may not result in bankruptcy, but may
cause severe financial distress.

4. Development of policy:

Based on the risk evaluation level of the firm, the risk

management policy needs to be developed. The time
frame of the policy should be comparatively long, so that
the policy is relatively stable. A policy generally takes the
form of the declaration as to how much risk should be
covered.

5. Development of strategy :
Based on the policy, the firm then needs to develop the
strategy to be followed for managing risk. A strategy is
essentially an action plan, which specifies the nature of
risk to be managed and the timing. It also specifies the
tools, techniques and instruments that can be used to
manage these risks. A strategy also deals with tax and
legal problems. Another important issue that needs to be
specified by the strategy is whether the company would
try to make profits out of risk management or would it
stick to covering the existing risks.

6. Implementation :
Once the policy and the strategy are in place, they are to
be implemented for actually managing the risks. This is
the operational part of risk management. It includes
finding the best deal in case of risk transfer providing for
contingencies in case of risk retention, designing and
implementing risk control programs etc.

7. Review :

The function of risk management needs to be reviewed

periodically, depending on the costs involved. The factors
that affect the risk management decisions keep changing,
thus necessitating the need to monitor the effectiveness
of the decisions taken previously.

INTRODUCTION
Bank of Maharashtra

Type.
MAHABANK

:-

Public company, BSE & NSE:

Industry
industries

:-

Banking, Capital markets and allied

Founded

:-

1935

Headquarters:-.

1501, Lokmangal,
Shivajinagar,
Pune India.

Key people
Director

:-

Sushil Muhnot, Chairman & Managing

R K Gupta, R Athmaram, Executive

Directors
Products
:investment etc.

Loans, credit cards, savings,

Revenue.

:-

^60939 million(US$920 million)

Total assets.

:-

481 million

Website.

:-

www.bankofmaharashtra.in

Bank of Maharashtra is a major public sector bank in

India. Government of India holds 81.2% of the total
shares. The bank has 15 million customers across the
length and breadth of the country served through more
than 1868 branches. It has largest network of branches
by any public sector bank in the state of Maharashtra.

HISTORY
The bank was founded by a group of visionaries led by
the late V. G. Kale and the late D. K. Sathe and registered
as a banking company on 16 September 1935 at Pune.
The bank was registered on 16 September 1935 with an
authorised capital of1 million, and began business on 8
February 1936. Bank's financial assistance to small units
has given birth to many of today's industrial houses. After
nationalization in 1969, the bank expanded rapidly. Shri
Narendra Singh who had assumed the office of Chairman
and Managing Director from 1 February 2012, left his
office on 30 September 2013 on attaining
superannuation. Shri Sushil Muhnot is the new Chairman
and Managing Director.

Autonomy of the bank

The bank attained autonomous status in 1998. As a
result, the bank has limited interference of Government
bureaucracy in its decision making process and internal
affairs.

Other attribute
Convener of the State Level Bankers Committee.*.Offers
Depository services and Demat facilities at 131
branches.*.Has a tie up with Life Insurance corporation of
India and United India Insurance company for sale of
insurance policies.*.Has achieved 100% CBS enabling
anytime anywhere banking to its customers

Log
The logo is made of the following items:*.The Deepmal with its many lights
rising to greater heights,*.The Pillar - symbolising
strength,*.The Diyassymbolising services,*.The three Ms - symbolising
mobilisation of money,
modernisation of methods, motivation of staff.The Press

The bank attracted negative media attention in June

2013, when newspapers
reported the story of victimisation of the bank's exDirector Shri Devidas
Tuljapurkar, who had in October 2012 written to the RBI
Governor Dr D.
Subbarao regarding fraudulent loans given by the bank.
[3]The complaint was
unwittingly forwarded by the governor to BoM
management, which then
started alleged harassment of Tuljapurkar, showing the
absence of a safe
whistle blower policy in the bank.

Risk Management practices in

Bank of Maharastra
7.1 Credit Risk:
The Bank has put in place a robot Risk Management
Architecture with due focus not only on capital
optimization but also on profit maximization, i.e. to do
maximum profit or return on equity. Bank is
benchmarking on globally accepted sound risk
management system, conforming to Base II framework,
enabling a more efficient equitable and prudent allocation
of resources.
In Capital Planning process the Bank reviews:
Current capital requirement of the Bank
The targeted and sustainable capital in terms of
business strategy and risk appetite.
Capital need and capital optimization are monitored
periodically by the Capital Planning Committee
comprising Top Executive Sensitivity analysis is
conducted quarterly on the movement of Capital
Adequacy Ratio, considering the projected growth in

advances, investments in Subsidiaries/ Joint Ventures and

the impact of Base II framework etc. The Committee
takes into consideration various options available for
capital argumentation in tune with business growth and
realignment of Capital structure duly undertaking the
scenario analysis for capital optimization.
CRAR of the Bank is projected to be well above the 12%
in the medium term horizon of 3 years, as prescribed in
the ICAPP Policy.

7.2 Strategies and processes

In order to realize the above objectives of Credit Risk
Management the Bank prescribes various method for
Credit Risk identification, measurement, grading and
aggregation techniques, monitoring and reporting, risk
control / mitigation techniques and management of
problem loans/ credit . The Bank has also defined target
markets, risk acceptance criteria, credit approval
authorities, and guidelines on credit origination /
maintenance procedures.
The strategies are framed keeping in view various
measure for CREDIT RISK MITIGATION, which includes
identification of thrust areas and target markets, fixing of
exposure ceiling based on regulatory guidelines and risk
appetite of the Bank Concentration Risk, and the
acceptable level of pricing based on rating.

To have focused attention to large Corporate, specialized

branches wiz, Prime Corporate Branches have been set
up in major centre. Further, Retail Hubs have category of
specialized centres for promoting and monitoring SME
lending business. These specialized centres are also
intended to effectively manage and monitor their
respective portfolios.
In order to improve the quality of appraisals and to
ensure accelerated response to customers, particularly in
respect of high value credits, relationship and appraisal
functions are segregated between the concerned branch
and the Core Credit Groups at Circle Office. Large value
corporate exposures are legally monitored through
specified branches.

7.3 MITIGATION OF CREDIT RISK

Mitigation of credit risks and enhancing awareness on
identification of appropriate collateral taking into account
the spirit of Base II / RBI guidelines and Optimizing the
benefit of credit risk mitigation in computation of capital
charge as per approaches laid down in Base II / RBI
guidelines.
The Bank generally relies on Risk Management
techniques like Loan participation Ceiling on Exposures,
Escrow mechanism, Forward cover, higher margins, loan
covenants, Collateral and Insurance cover. Valuation

methodologies are detailed in the Credit Risk

Management Policy.
Bank accepts guarantees from individuals with
considerable net worth and the Corporate.
All types of securities eligible for mitigation are easily
realizable financial securities.
: Mitigation Techniques
The Bank is required to have a system for monitoring the
overall composition and quality of the various portfolios
since credit related problems in banks is concentration
within the credit portfolio. It can take many forms and can
arise whenever a significant number of credit have similar
risk characteristics. Such measures will include
a. pricing for additional risk,
b. increased holdings of capital to compensate fot the
additional risk,
c. making use of loan participation in order to reduce
dependency on a particular sector of economy of group of
related borrowers.
d. Fixing exposure limits for borrowers and for various
industrial sectors
e. Collateral security in addition to main securities
stipulating asset coverage ratio on case to case basis
f. Personal Guarantees / Corporate Guarantees having
reasonable net worth.

7.4 MARKET RISK :

The overall objective of market risk management is to
create shareholder value by improving the Banks
competitive advantage and reducing loss events.
While overall leadership and control of the risk
management framework is provided by Risk
Management Wing, the business units are empowered
to set strategy for taking risk and manage the risk.
All issues or limit violation of a pre-determined severity
(materiality, frequency, nature) are escalated to the
Risk Management Wing where the actions to address
them are determined by the appropriate authorities.
The business units are responsible for implementing
the decision taken.

The process aims to

Establish a pro active market risk management culture
to cover Establish a pro active market risk
management culture to cover market risk.
Developing consistent qualities in evolving policies &
procedures relating to identification, measurement,
management, monitoring, controlling and reviewing of
Market Risk.

 Establish efficient monitoring mechanism by setting up

a strong reporting system.
Adopt independent and regular evaluation of the
market risk measures.

7.5 OPERATIONAL RISK

The Operational Risk Management process of the Bank is
driven by strong organizational culture and sound
operating procedures, involving corporate value attitudes,
competencies, internal control culture, effective internal
reporting and contingency planning.

CHAPTER 2
REVIEW OF RELATED

LITERATURE

INTRODUCTION
The purpose of review it to view again in new
perspective past investigation in the chosen field and
protected further in new directions, in greater depth to
what is still in known and untested the researcher to
define the limits of his field it helps the researcher to
delimit and define his problems.
Such a review help us to avoid unnecessary duplication it
thus enables the researcher to evaluate and interpret the
significance of its findings and also provide hypothesis
and helpful suggestions investigation in the light of
studies already conducted in his or her field.

Review of books
1.
Title
: Asset Liability Management
Author : T. Ravi Kumar
Imprint : Vision Book
About the Book
The face of Indian financial sector changed forever
with initiation of economic reforms in 1991.
Deregulation and integration has led Indian banks

and financial institutions into competition both on the

assets side as well as the liabilities side of the
balance sheet, forcing them to assume greater and
newer risks in their quest for higher returns.

2. Title
: Guide To Risk Management In
Imports And in
INDIA
Author
: Ajay Gupta

Publisher

: Wolters Kluwer India Pvt Ltd

About the Bank

Every organization is exposed to uncertainties
involved in imports/exports. Growing free trade
agreements and internationalization of commodities
due to outsourcing of intermediaries has forced even
the most conservative organizations to imports raw

materials, components and intermediaries , so as to

remain cost effective and competitive.

BENEFIT OF RELEVANT STUDY

Going through various topic of research work, the
researcher got some ideas and techniques of the research
work there has been a lot of research work done in
various field of management, through such reference
work, the researcher has ,made to contemplate and
found that this topic of risk management was not taken
up so fair. As such interest in this topic grew stronger.
Most importantly this study generated a good feeling
regarding research work. It was felt that It of scope there
to conduct research work.

CHAPTER 3
Research and
Methodology

INTRODUCTION
Research has proved to be an essential and powerful tool in
leading man towards progress it is consider to be as formal,
systematic intensive process of carrying on the scientific
methods of analysis research is a more specialized phase of
scientific methodology.
It emphasis is on scientific generalizations that can be
applied to be solutions of wide range of problems therefore it
is based on observable experience, it demands accurate
observations and description.

Research design and its needs

Planning and designing of all the procedures and methods to be
used in the research works helps to achieve economy in time and
coordination of efforts, the selection of research design depends
on the objective of the study, variable and conditions under which
it is conducted .
It helps the researcher to organize his ideas in a form, whereby it
will be possible for him to look for flaws and inadequacies.

Research methodology
There are three categories given below :
1. Historical research
2. Experimental research and
3. Descriptive research
From the above categories descriptive research is used for
research work. DESCRIPTIVE RESEARCH. It is used to present
a broad range of activities that have in common the purpose of
describing situations .the descriptive investigation are of immense
value in solving various problems .
There are several types of descriptive research which are as
follows:
1. Survey type

2. Casual comparative
3. Correlation study
4. Development study
5. Case study

Methodology of the present study

The main aim of the present research is to study risk
management. A Case study on risk management
Under descriptive method the researcher has adopted survey
method enables the use of data gathering instruments and tools
like questionnaire.
These studies are designed to obtain pertinent and precise
information concerning the current status of phenomenon and
whenever possible, to draw valid general conclusion for the facts
discovered.

Tools of research
The quality of research work depends not only on adequacy of the
research design, but on the suitability of the tools and technique
employed. Tools vary on what exactly is to be measured.
The major data gathering tools of research are :
1. Questionnaire

1.Questionnaire
In general the word questionnaire refers to a device for securing
answer to the questions by using form which the respondent fills
in himself. .W.J.Goode and P.K.Hatt. Questionnaire is the most
flexible tool. It is easy to administer and easy to plan. It is used to
obtain facts about current condition and practices.

Tools preparation
The tools chosen for the research work was questionnaire. It
consisted of two questionnaire forms which are asked to manager
of bank and asked to customers . A list of 5 questions are
included in case of risk management point of view and 10
questions from customers point of view.

Conclusion:
Once data is collected the most crucial step is to give some
meaning some meaning to the collected data here to arrive at
result with the help of collected information, a researcher needs to
organize process and interpret them. Organizations and
processing of data need to help of statistical techniques.
The researcher adopted the descriptive survey method because
the method information was very much depending upon the
responses of the sample under survey. The tool used for
collecting information is questionnaires.

CHAPTER 4
DATA Analysis
And Interpretation

INTRODUCTION
Data analysis is critical to the management of risk and
the oversight of claims handling. Understanding a
programs experience sets the direction for future action
by outlining what has occurred, where the program
stands today (the current baseline), and what
opportunity.
Data analysis as a discipline contains three interrelated
components
Process Management
Data
Analysis

Process management provides the frame work for

initiating and directing a data analysis project. A
widely accepted approach within the discipline is the
Cross Industry Standard process of Data Mining
(CRISP-DM). A complete explanation of the steps in
the steps in the process and supporting
documentation can be found at http://www.crispdm.org/ . Aside from a frame work data analysis
requires a solid foundation, which is the data itself.
Previous articles have outlined the data life cycle
(Higdon, Keith M., Understanding the Data Lifecycle,
John Liner Review , Vol, 24, NO. 1, Standard
Publishing Corp, Boston, MA, Spring 2010) and its
five stages.
1. Capture
2. Storage
3. Access
4. Analysis
5. Deployment
When considering a data analysis project,
understanding the first three stages of the lifecycle
create the foundation by setting boundaries around
what is currently possible. The purpose of this article
is to expand on the processes within stage 4
(analysis) with additional considerations for making
the act of solution deployment (stage 5) have a more
practical impact. By having a better understanding of
the methods of analysis, metrics commonly used in
data analysis and statistical techniques, risk
management departments will be in a better position

to assess their need for analysis, to indentify the

resources and commitment necessary to design and
implement a data analysis project, and to set
appropriate expectations as to the usefulness of the
information obtained.

MANAGER QUESTIONS
NAME OF MANAGERBRANCH- Dombivli (WEST)
1.What challenges are you looking for this bank
risk manager position?

= The current scenario lays greater focus on selection of

borrowers right deployment of resources better asset and
liability management of NPA and arresting fresh inflow to
NPA.

2. How do you integrate risk management with

the corporations strategic direction and plan?
= In emerging like India medium and large industries play
a dominant role in hosting the GDP of the country.

3. Are you taking the right amount of risk?

= At a time when a economy scenario is in subdued
condition there is greater responsibility on to focus
correctly of the sector to ejaculate the business of the
bank.

4. How effective is your process for identifying,

assessing and managing business risk?
= The need of the art is to have greater focus on proper
identification of quality credit proposals through
identifying of quality credit proposals through identifying
assessing coordinating credit risk.

5. Do people in the organization have a common

understanding of the term?

= Yes, training imports are divide in such a manner

taking into A/c present future requirements to that skills
are sharpened to effectively meet the challenges ahead

6. How is risk management co-ordinated across the

organization ?
= Various credit management program are conducted at
various levels to arrived to be useful in managing the
credit portfolio.

7. How do you decide what information on risk you

should publish?
= Business is abandoned in the market place but what
need to be analyzed will be ability of the bank to publish
accurate figures.

Suggestions for Bank of Maharashtra

The Bank should strive hard to establish strong credit
system and controls. This should cover loan approvals,
loan rating and review and portfolio management.
Control should be rigorously implemented to ensure
effectiveness. The lending policy exceptions should be
brought down to rare minimum.

 Properly orientation of entrants in credit functions.

In credit rating maximum weightage is given on
subjective parameters than of statistical, this should be
corrected.
Various innovative marketing strategies should be
employed by the marketing staff so that they are in a
position to convert more of their deposits into
advances.

CHAPTER 5

Summary finding
recommendation
and conclusion

Conclusion

Risk management liability is a topic that is often among people

working with non profit and charitable organization. We
conducted research to learn more about the strategies and
procedures that some non profit and charitable organizations
use to deal with risk. We found out that, among the organization
are surveyed, less than half (46%) had a risk management plan in
place. Yet, each organization faces different risks and should
plan and implement different ways to deal with those risks. Each
nonprofit and charitable organization is complex and unique, so
one-size fits-all risk management programs are not possible. The
experience and knowledge of volunteers, board members, and
staff should be the basis for developing a sound risk
management program. In this planning guide we have suggested
that risk management plans must include financial management,
board governance and management, volunteer management,
and insurance. Most of our respondents indicated that they
included one or more of these components in there risk
management activities. Risk management is the thoughtful
process of recognizing and controlling risks so you can protect
and conserve resources. It should cover all aspects of your
organization including its mission, goals, activities, staffing and
funding. Risk management can be incorporated into general
program planning. When you decide on goals for the
organization and the activities needed to achieve them, include
risk management in your plan. It is better to plan for risk than to
deal with problems.

BIBLIOGRAPHY
Books
RISK MANAGEMENT REFERENCE BOOK

WEBLIOGRAPHY
www.google.com
www.riskmanagement.com
www.bankofmaharastra.com

Appendix 1
Respondents Profile
Name: ____________
Age: ____________
Gender (M/F):____________
Profession: ___________
Organisation: _______________

QUESTIONNAIRE:
1. Does your organization have a documented risk
management policy?
a. Yes
b. No

2. In pursuing organisation objectives, you view

risk as?
a. A threat
b. An opportunity

3. How important is effective risk management to

the achievement your organizations objectives?
a. Very important
b. Important
c. Not at all

4. Effective risk management can improve your

organization's performance
a. Strongly disagree
b. Disagree
c. Neutral
d. Strongly agree
e. Agree

5. Has training been provided by your organization

on?
a. Risk
b. Risk policy, procedure and practices
c. Risk taking

6. What tools and techniques do you use for

identifying risk ?
a. Audits or physical inspection
b. Brainstorming
c. Examination of local/overseas experience
d. SWOT
e. Interview / focused group discussion
f. Judgemental
g. Surveys questionnaire
h. Scenario analyzing
i. Operational modelling
j. Past organizational experience
k. Process analysis

7. Type of model used for risk management.

a. Manual
b. Risk Assessment Model (A.S.M)
c. Small Value Model
d. Portfolio Model

8. Monitoring the effectiveness of risk management

is an integral part of routine management
reporting.
a. Strongly disagree
b. Disagree
c. Neutral
d. Strongly agree
e. Agree

9. Are the risk management process with in your

organization subject to audit or other quality

assurance mechanism?
a. Yes
b. No

10. Your organization is able to allocate appropriate

resources in support of management policy or
practices?
a. Strongly disagree
b. Disagree
c. Neutral
d. Strongly agree
e. Agree

11. Overall, at what stage of risk management

practices developments do you consider your
organization to be at:
a. Best practice
b. Well Developed
c. Reasonably Well Developed
d. Basic
e. Non Existent

12. In the last 5 year the level of risk faced by your

branch has:
a. Increased
b. Decreased
c. Not Changed

d.

Not Sure