A study on the significance of risk management in banking sector

Risk Management refers to the Practice of identifying potential risk in advance, analysing them and taking precautionary measures to reduce the risk. Risk arises from uncertainty. It can be considered as an unplanned event with financial consequences resulting in loss or reduced earnings. The most important challenge faced by the banks today is the challenge of understanding and managing the risk. The present paper tries to understand the various types of risks faced by the bank and how the risk can be controlled. It also examines the process of risk management and the different techniques adopted by the banking industry. The study which is conceptual in nature and is based upon data collected from secondary sources. It can be concluded that the success of the organization will be depending upon how efficiently the enterprise takes care of the entire risk management system. It ensures that the risks are consciously taken with full knowledge, clear purpose and understanding-so that it can be measured and mitigated.