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A study on

Risk Management in Banking Sector


Objectives
To Cover different aspects of risk assessment
To identify keys for effective risk management
To understand the challenges and impact of Implementing Basel II
Methodology
The study aims to understand how the new regulations were perceived in terms of priority,
urgency and interest within the banks. In addition, aim is to provide a view on strategic issues
and to report on key trends related to many aspects of compliance within the Basel II regulatory
framework. Finally, to make recommendations on the opportunities offered by the new
regulations for the risk management process. To achieve the defined objectives research process
will be divided into two phases.
Phase I will be exploratory in nature, and will include exploration of the secondary literature
available on the given topic. The study is descriptive and analytical in nature. It is descriptive as
it describes that the objective of risk management is not to prohibit or prevent risk taking
activity, but to ensure that the risks are consciously taken with full knowledge, purpose and clear
understanding so that it can be measured and mitigated. It is analytical as it analyses the
perception of various individuals.
Phase II will be descriptive in nature and will involve designing of the questionnaire, data
collection with a sample size of 100.
Interview and questionnaire will be used to conduct the study. A structured questionnaire
consisting close-ended questions will be made, which would be filled by the trainee during direct
interaction with the respondents. Interviews will be taken of managers of different BANKS to
seek the perception of different individuals.

Managerial Implication
Risk management underscores the fact that the survival of an organization depends heavily on its
capabilities to anticipate and prepare for the change rather than just waiting for the change and
react to it. The objective of risk management is not to prohibit or prevent risk taking activity, but
to ensure that the risks are consciously taken with full knowledge, purpose and clear
understanding so that it can be measured and mitigated. It also prevents an institution from
suffering unacceptable loss causing an institution to suffer or materially damage its competitive
position. Functions of risk management should actually be bank specific dictated by the size and
quality of balance sheet, complexity of functions, technical/ professional manpower and the
status of MIS in place in that bank.
Note: If the study is based on secondary data only, in that case Phase II is not to be
included.
Also for phase II , interviews and focus group discussions can be the mode for collection of
primary data.