RISK MANAGEMENT IN BANKING SECTOR

In an increasingly volatile and globalized financial environment, risk management plays a crucial role in ensuring the stability, profitability, and sustainability of banking institutions. Modern banks encounter various forms of risks—credit risk from borrower defaults, market risk from interest and exchange rate fluctuations, operational risk from system failures or internal fraud, and compliance risk stemming from stringent regulatory frameworks. This study undertakes a in-depth evaluation of risk management practices in the banking sector, aimed at exploring how banks in India identify, assess, mitigate, and monitor these risks within a dynamic regulatory and economic landscape. The study adopts a mixed-method research approach, combining both quantitative and qualitative methodologies to ensure a balanced and rigorous examination. Primary data was collected through structured questionnaires administered to 60 banking professionals from both public and private sector banks, with a valid response set of 50. The survey captured various dimensions of risk management, including risk awareness, policy frameworks, tools and technologies used, staff training, and adherence to regulatory guidelines. Additionally, secondary data from RBI reports, Basel Committee publications, peer-reviewed journals, and case studies were incorporated to provide a theoretical and regulatory context. The findings reveal a significant variation in the maturity and effectiveness of risk management systems across banks. While credit risk continues to be the most commonly recognized and managed risk, concerns over cybersecurity and compliance risk are rising due to increased digitalization and evolving regulatory landscapes. Well-established private banks tend to demonstrate stronger, automated, and data-driven risk management frameworks, whereas government banks generally depend on outdated and manual processes and face challenges related to legacy infrastructure and skill gaps. Notably, the