Employee S Perception of Risk Management in Indian Banks

Risk is detrimental to the financial health of the bank and could threaten its survival. To make the banking function sound and diversify the risk, it is necessary to deal with all kinds of risks related to banking. The future of banking will undoubtedly rest on risk management dynamics. Only those banks that have efficient risk management systems will survive in the market in the long run. The study attempts to analyze the risk management practices of Indian banks (Public and Private Sector) so as to infer the status of risk management in Indian banks. This will help in estimating the strength of Indian banks, their resilience to probable catastrophes, and their preparedness for uncertain events. Based upon the norms declared by the Bank of International Standards, viz., Basel norms, a questionnaire-based survey was performed to gauge the standing of Indian Banks. The primary data required for the proposed study has been gathered with the help of two questionnaires and semi-structured interviews. The first questionnaire attempts to explore the perception of employees in the risk management department regarding the risk, risk management practices, and overall risk management philosophy of banks. A total number of 20 banks: 10 Public Sector, 6 Private Sector (New), and 4 Private Sector (Old) Banks have been selected for the study. So, the sample consisted of 100 respondents with 5 employees from each bank. All these respondents belong to the risk management department of the banks under study. The questionnaire is divided into a number of categories that correspond to aspects of the risk management process in Indian banks. The questionnaire includes the following sections: Risk severity, Risk Identification (RI), Risk Assessment & Analysis (RAA), Risk Management Practices (RMP), Risk Monitoring (RM), Mitigation of Risk (MTR), Credit Risk Management (CR), Market Risk Management (MR) and Operational Risk Management (OR). The questionnaire is objective in nature and seeks responses on a seven-point Likert Scale on statements from each section.