A Study on Risk Management in Banking Industry Essay

take chances counselling is relatively new and rising manage as far as Indian savings banks be concerned and has been turn out that its a mirror of strainlike incarnate governance of a pecuniary institution. Globalization and significant competition among foreign and domestic banks, survival and optimizing returns ar very crucial for banks and monetary institutions. However, selecting the in effect(p) customer and providing innovative and value added financial products and services are another paramount factors.In a quicksilver(a) and impulsive market place for achieving sustainable pipeline growth and shareowners value, it is essential to develop a link between insecuritys and rewards of on the whole products and services of the bank. Hence, the banks should apply speak to- in effect(p) gamble attention manikin to excuse all internal and external assays. The butt of this study is to envisage ideal fabric of bank- extensive risk management for India n jargons. The strawman of accurate measures of bank-wide risk management practice increase shareholders returns and allows the risk-taking style of bank to be more nigh aligned with strategic impersonals. Bank-wide risk management practice should aim to enhance the drivers of shareholders value such as 0 Growth1 risk of infection adjusted performance measurement2 Consistency of earnings and3 feel and transparency of management.The important steps of the efficacious framework of banking concern should ensure all risks are identified, prioritized, quantified, controlled and managed in order to get an optimal risk-reward profile. This entails ideal and devote coordination of risk management across the banks various business units. However, the approach to monitor and enforcing the adherence of business units within the bank may vary. The factors that influence this decision are 4 The feasibility decisions of the business unit.  5 The regulatory requirements in respect of the business unit. 6 The cost of telling supervise and controlling steps. Risk management is a line function that needs to be addressed by each separate cost center and business unit. However, a centralized bank-wide risk management framework has certain profits for the Bank.The advantages are 7 change capital efficiency by providing an objective basis for allocating resources reducing expenditures on deaf(p) risks and exploring natural hedges and portfolio effects 8 back up informed decision making by uncovering areas of high potential inauspicious impact on drivers of share value, and identifying and exploiting areas of risk-based advantage context. 9 Building investor confidence by establishing a process to stabilize results by protecting them from disturbances, and demonstrating proactive risk stewardship 10 Define cost and profitability centers11 Profitability and cost allocation on customer, product, services and branch wide nigh of the banks do not have dedicated ri sk management team, policy, procedures and framework in place. Those banks have risk management department, the risk managers role is circumscribe to pre-fact and post-fact analysis of customers attribute and there is no segregation of credit, market, operative and strategic risks. There are a couple of(prenominal) banks have articulated framework and risk quantification. However, the outputs are far from the stressed or actual losses due to practise of un-compatible implications.The traditional lending practices, assessment of credits, handling of market risks *, treasury functionality and culture of risk-rewards are hauls of public sector banks. Where as head-to-head sector banks and financial institutions are some-what separate in this context.The sheer size and wide coverage of banks is a big overleap to integrate and generate a cost effective real time working(a) data for mapping the risks. Most of the financial institutions processes are encircled to functional silo s follows bureaucratic structure and yet to come up with a transparent and appropriate corporate governance structure to achieve the say strategic objectives.CONCLUSIONThere are many banks like HSBC, Citibank, Deutsche bank have bank-wide risk management practice which contributed in their global success whereas banks and institutions like Sumitomo Corp, Barings, Bank of America, CSFB and UTI have failed due to lack of efficient bank-wide risk management practice (compliance and operational risks). So the above comments emphasis the requirement of having bank-wide risk management to achieve the express strategic objectives in a competitive, volatile and dynamic market conditions in an emerging Indian economy. We believe the above-described bank-wide risk management framework is easy workable, cost effective and efficient process without any hassles or hurdles of high-tech tools and techniques