A A Study on Risk Management in the Banking Industry

Risk management - A Plan to Manage anticipated losses


  • Rishi Vyas Rishi PHD Research Scholar
  • Hiresh Luhar Hiresh


Risk management, Banking Risk, RIshi Vyas, Rishi vyas PHD Research paper, PHD, Indian Banking




The research paper is based on a study conducted on Risk Management in the Banking Industry with reference to the applicable tools and techniques. For undertaking the analysis of the risk management practices in the Banking Sector based on the secondary data. The emphasis of this paper was to study the complexities of Risk Management in the current scenario, its types & techniques to mitigate the adverse impact of each type. This research paper states about the different tools and techniques and methods used by banks to reduce the risk.


Keywords: Risk Management, Tools and Techniques, Banking Industry.




In banking, a risk management board is a legal development and implementation of a plan to manage anticipated losses. In the financial industry, the board's main focus when taking a risk is to address how vulnerable an enterprise is to misfortune or risk and to protect the value of its resources. To ensure their benefit and sufficiency, banks must take enormous risk. In order to ensure that all risks associated with the bank's operations are identified, estimated, restricted, controlled, eased, and thoroughly investigated, bank supervisors have established a cycle. Identification, estimation, and assessment are all included in risk management to reduce the effect of the gamble on banks' financial standing. Their main objective is to reduce the dangers by utilizing pre laid changes by Banks.


Research Gap:


Every business, whether it is monetary or non- monetary carries some level of risk. The Risk manager to identify the risk is very important in this way. Risk management professionals begin by identifying the frauds, then look at the factors, evaluate the fraud, and reduce the risk. Greater chance the risk management board strategies provide early warning signals so that the risk mitigation may be attended to in due course. Formerly, natural disasters like fires, earthquakes, floods, and other common calamities were simply viewed as random events, and models, equipment, and mechanisms for protected guards were used to help control the risk. The management of various risks has, nevertheless, become increasingly important in the current era of a rapidly changing global economy.


Problems of the Study:


Due to their management's absolute failure to effectively manage risk and credit organisation, business banks in the recent past saw an increase in their non-performing credit portfolios. Due to this problem, commercial banks experienced substantial bad debt levels, and financial experts classified a number of additional banks as distressed institutions.


Overexposure to risk can result in bank disappointment and have a significant impact on a wide number of people due to the massive size of some banks. Governments can establish better regulations to support sensible administration and independent direction by having a better awareness of the risks posed to banks. Financial investors' decisions are also influenced by a bank's capacity to manage risk. Even if a bank can generate significant profits, a lack of risk management might reduce profits due to bad experience with loans. Relatively decent investors are obligated to invest money in a bank that can provide benefits and isn't taking an unnecessary risk of becoming bankrupt. The government's regulatory reforms, rising consumer demands, cybersecurity breaches, fraud and identity theft, ineffective internal processes, increased competition, etc., are major issues that banks must deal with in order to reduce risk.


Objectives of the Study:


To study the risk management processes in the banking industry.


To study the types of risk in the banking industry.

To analyze the tools and techniques to mitigate the risk in the banking industry.





How to Cite

Rishi, R. V. and Hiresh, H. L. (2023) “A A Study on Risk Management in the Banking Industry: Risk management - A Plan to Manage anticipated losses”, Journal of Global Economy, 19(2), pp. 17–29. Available at: http://www.rcssindia.org/jge/index.php/jge/article/view/687 (Accessed: 29 May 2023).