Risk Management In Bank Of Maharastra

A PROJECT ON “RISK MANAGEMENT IN BANKS” SUBMITTED TO THE UNIVERSITY OF MUMBAI IN PARTIAL FULFILLMENT FOR THE AWARD OF THE DEGREE OF BACHELOR OF COMMERCE (BANKING AND INSURANCE) SEMESTER V (SEAT NO:1150841 )

BY SIDDHESH SANJEEVKUMAR SWAMI THE S.I.A COLLEGE OF HIGHER EDUCATION 2015-2016

DECLARATION BY THE RESERCH STUDENT I hereby declare that this project titled “RISK MANAGEMENT IN BANK OF MAHARASHTRA”. Submitted by me is based on actual work carried out by me under the guidance and supervision of MR.MAHESH KANDALKAR. Any reference to work done by any other person or institution or any material obtained from other sources have been duly citied and reference. It is in future to state that this work is not submitted anywhere else for any examination.

SIGNATURE OF STUDENT

(SIDDHESH SWAMI)

ACKOWLEDGEMENT I am thankful to Professor MR. MAHESH.G.KANDALKAR for his valuable guidance in successful completion of this project. My over riding debt due to our Principal MRS. Dr. PADAMAJA ARVIND MAM and librarian MRS.BHARATI RAO MAM. Last but not the least I cannot forget my friends and my parents whose constant encouragement and support made this task a happy job.

SIGNATURE

SIDDHESH SANJEEVKUMAR SWAMI (THIRD YEAR BACHELOR OF COMMERCE) (BANKING AND INSURANCE)

The SIA College Of Higher Education. P88, MIDC Residential Area Dombivli Gymkhana Road, Near Balaji Mandir, Dombivli (East). 421 203. Email:

[email protected]

CERTIFICATE This is to certify that, Mr. SIDDHESH SANJEEVKUMAR SWAMI Student of BCOM (Banking and Insurance V) 2014-2015 Seat No.has successfully completed his Project Work on RISK MANAGEMENT IN BANK OF MAHARASHTRA under the guidance of PROF.MR. MAHESH.G.KANDALKAR as per Mumbai University syllabus.

COURSE CO-ORDINATOR

EXTERNAL EXAMINER

PROJECT GUIDE

PRINCIPAL

INDEX SR.N

TOPIC

O 1

2

CHAPTER 1 INTRODUCTION: 1: Importance of study 2: Main objectives of study 3: What is Risk?  4: Types of risk  5: Risk Management  6: Implementation of risk management  7: Risk management Strategy  8: Principles of risk management  9: Risk management process  10; Introduction to BANK OF MAHARASHTRA 11: Risk management practices in BANK OF MAHARASHTRA CHAPTER 2 REVIEW OF RELTED LITRATURE 1: Introduction 2: Review of books 3: Benefits of relevant study

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CHAPTER 3 RESEARCH AND METHODOLOGY 1: Introduction 2: Research design and its need 3: Research methodology

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4; Methodology of present study 5: Tools of research 6: Questionnaire 7: Tools preparation 4

8: Conclusion CHAPTER 4 DATA ANALYSIS AND INTERPRETATION 1: Introduction 2 : Managers question 3 : Suggestions for Bank of Maharashtra

5.

CHAPTER 5 SUMMARY FINDING RECOMENDATION AND CONCLUSION 1: Conclusion 2 : Bibliography 3 : Appendix I 4 : Questionnaire

CHAPTER 1 INTRODUCTION

Importance of study:-

Importance of study:The project helps in understanding the clear meaning of Risk Management in bank of Maharashtra. It explain about the credit risk, market risk and operational risk scoring and Rating of the Bank. By the analysis of Risk management in Bank of Maharashtra we get to know about different types of risks involved in a bank and the Importance of Risk Management in today’s Banking Sector in India its scope and growth. To find out the Risk Management policies of Bank of Maharashtra and how they are successfully implementing to tackle various problems. Research methodology to be used for primary and secondary data to be collection. Though the Risk Management in Bank of Maharashtra is very wide and elaborated, still the project covers whole in concise manner.

Main objectives of study: To study broad outline of management of credit, market and operational risks associated with Bank of Maharashtra.  To understand the importance of risk management in Bank of Maharashtra.  To study problem related to risk management in Bank of Maharashtra.  To study aims at learning the techniques involved to manage the various types of Risk of Bank of Maharashtra.

WHAT IS RISK? :Meaning:Risk is part of every human endeavor. From the moment we get up in the morning, drive or take public transportation to get to school or to work until we get back into our beds (and perhaps even afterwards), we are exposed to risks of different degrees. What makes the study of risk fascinating is that while some of this risk bearing may not be completely voluntary, we seek out some risks on our own (speeding on the highways or gambling, for instance) and enjoy them. While some of these risks may seem trivial, others make a significant difference in the way we live our lives. On a loftier note, it can be argued that every major advance in human civilization, from the caveman¡¯s invention of tools to gene therapy, has been made possible because someone was willing to take a risk and challenge the status quoin this chapter, we begin our exploration of risk by noting its presence through history and then look at how best to define what we material with the lose the chapter by restating the main theme of this book, which is that financial theorists and practitioners have chosen to take too narrow a view of risk, in general, and risk management, in particular. By equating risk management with risk hedging, they have underplayed the fact that the most successful firms in any industry get there not by avoiding risk but by actively seeking it out and exploiting it to their own advantage .A Very Short History of Risk For

much of human history, risk and survival have gone hand in hand. Prehistoric humans lived short and brutal lives, as the search for food and shelter exposed them to physical danger from preying animals and poor weather.

Definition:DEFINITION of 'Risk' The chance that an investment’s actual return will be different than expected. Risk includes the possibility of losing some or all of the original investment. Different versions of risk are usually measured by calculating the standard deviation of the historical returns or average returns of a specific investment. A high standard deviation indicates a high degree of risk. Many companies now allocate large amounts of money and time in developing risk management strategies to help manage risks associated with their business and investment dealings. A key component of the risk management process is risk assessment, which involves the determination of the risks surrounding a business or investment.

Types of risk :Risk faced by the bank can be segmented into three separated typed from the management perspective viz. a. Risks that can be eliminated or avoided by simple business practices b. Risks that can be transferred to other business participants (eg. Insurance policy) and c. Risks that can be actively managed at the bank level. Risk is any real or potential event, action or omission, internal or external, which will have an adverse impact on the achievement of Bank’s defined objectives. Risk is inherent in every business. Risk cannot be totally eliminated but is to be managed. Risks are o be categorized into high risk, medium risk, and low risk and then managed.

Risks can be classified in to three broad categories:1. Credit Risk 2. Market Risk (Insurance rate risk, Liquidity Risk) 3. Operational Risk

1.

Credit Risk

Credit risk is defined as the “possibility” of losses associated with diminution in the credit quality of borrowers or counter parties. In a bank’s portfolio, losses stem from outright default due to inability or unwillingness of a customer or counter party to meet commitments in relation to lending, trading, settlements and other financial transaction. Credit risk emanates from bank’s dealing with individuals, corporate, bank, financial institution or a sovereign. Credit Risk may take the following forms:  In case of direct lending; principal/and or interest amount may not be repaid.  In case of treasury operation; the payment or series of payments due from the counter parties under the respective contracts may not be forth coming or ceases.  In case of securities trading businesses; fund / securities settlement may not be effected.  In case of cross-border exposure; the availability and free transfer of foreign currency fund may either cease or restrictions may be imposed by the sovereign.

2.

Market Risk

Market risk may be defined as the possibility of loss to a bank caused by changes in the market variables. Market Risk is the risk to the bank’s earnings and capital due to

changes in the market level of interest rates of prices of securities, foreign exchanges and equities, as well as the volatilities of those prices. Segments of Market Risk Liquidity Risk The risk that the group cannot meet its obligations when they fall due without incurring substantial costs in the form of expensive refinancing or the need to sell assets. Interest rate risk Interest rate risk is the risk where changes in market interest rate might advertise affect a bank’s financial condition. The immediate impact of changes in interest rates is on the Net Interest Income.

3.

Operational Risk

Operational risk is ‘the risk of direct or indirect loss resulting from inadequate or failed internal processes, people and systems or from external events.’ Internal process include activities relating to accounting, reporting, operations, tax, legal, compliance and personnel management etc. Broadly the following can be grouped under Operational Risk 1. Internal fraud.

2. External fraud. 3. Non adherence of system and procedures. 4. Poor documentation. 5. Business disruption due to Computer System failure. 6. Lack of succession planning. 7. Failure of customer due diligence.

Risk management :Meaning:Risk management refers to the practice of identifying potential risks in advance, analyzing them and taking precautionary steps to reduce/curb the risk. When an entity makes an investment decision, it exposes itself to a number of financial risks. The quantum of such risks depends on the type of financial instrument. These financial risks might be in the form of high inflation, volatility in capital markets, recession, bankruptcy, etc. So, in order to minimize and control the exposure of investment to such risks, fund managers and investors practice risk management. Not giving due importance to risk management while making investment decisions might wreak havoc on investment in times of financial

turmoil in an economy. Different levels of risk come attached with different categories of asset classes. For example:- a fixed deposit is considered a less risky investment. On the other hand, investment in equity is considered a risky venture. While practicing risk management, equity investors and fund managers tend to diversify their portfolio so as to minimize the exposure to risk.

Definition:In the world of finance, risk management refers to the practice of identifying potential risks in advance, analyzing them and taking precautionary steps to reduce the risk.

How risk management is done in banks..? Risk management in Indian banks is a relatively newer practice, but has already shown to increase efficiency in governing of these banks as such procedures tend to increase the corporate governance of a financial institution. In times of volatility and fluctuations in the market, financial institutions need to prove their mettle by with standing the market variations and achieve sustainability in terms of growth and well as have a stable share

value. Hence, an essential component of risk management framework would be to mitigate all the risks and rewards of the products and service offered by the bank. Thus the need for an efficient risk management framework is paramount in order to factor in internal and external risks. The financial sector in various economies like that of India are undergoing a monumental change factoring into account world events such as the ongoing Banking Crisis across the globe. The2007–present recession in the United States has highlighted the need for banks to incorporate the concept of Risk Management into their regular procedures. The various aspects of increasing global competition to Indian Banks by Foreign banks, increasing Deregulation, introduction of innovative products, and financial instruments as well as innovation in delivery channels have highlighted the need for Indian Banks to be prepared in terms of risk management. Indian Banks have been making great advancements in terms of technology, quality, as well as stability such that they have started to expand and diversify at a rapid rate. However, such expansion brings these banks into the context of risk especially at the onset of increasing Globalization and Liberalization. In banks and other financial institutions, risk plays a major part in the earnings of a bank. The higher the risk, the higher the return, hence, it is essential to maintain a parity between risk and return. Hence, management of financial risk incorporating a set systematic and professional methods especially those defined by the Basel II becomes an essential requirement of banks. The more risk averse a bank is, the safer is their Capital base.

Implementation a risk management

Risk Management is not about red tape. It’s about protecting staff, members and visitors from injury or death, as well as protecting your organization from legal liability, high insurance costs and reputational damage. All not-for-profit groups are exposed to a number of risks simply by virtue of the nature of the activities that they undertake. It’s your responsibility to do everything in your power to ensure that people and property closely related to our group are properly protected. The fact that many of the people are talking about are volunteers who give freely of their time makes this even more of a priority.

Risk Management Strategy Risk Management Strategy is an integral business process that incorporates all of the Risk Management processes, activities, methodologies and policies adopted and carried out in an organization. The Risk Management Strategy sets the parameters for the entire Risk Management and is usually released by the executive management of an organization . As depicted in the diagram of The Risk Process, Risk Management Strategy consists of two processes ,one setting the framework for the entire Risk Management and the other setting the communication channels in the organization.

Principles of risk management

Principles of risk management The International Organization for Standardization (ISO) indentifies the following principles of risk management:

Risk management should:  create value resources expended to mitigate risk should be less than the consequence of inaction , or (as in value engineering ) ,the gain should exceed the pain  be integral part of organizational process  be part of decision making process  explicitly address uncertainty and assumptions  be systematic and structured process  be based on the best available information  be tailorable  take human factors into account  be transparent and inclusive  be dynamic, iterative and responsive to change  be capable of continual improvement and enhancement  be continually or periodically re-assessed

Risk Management Process

The process of financial risk management is an ongoing one. Strategies need to be implemented and redefined as the market and requirements changes. Refinements may reflect changing expectations about market rates, changes, for example; in general, the process can be summarized as follows:

 Identify and priorities key financial risks.  Determine an appropriate level of risk tolerance  Implementing risk management strategy in accordance with policy.  Measure, reports, monitor, and refine as needed. Risk management needs to be looked at as an organizational approach, as management of risks independently cannot have the desired effect over the long term. This is especially necessary as risks result from various activities in the firm and the personnel responsible for the activities do not always understand the risk attached to them. The steps in risk management process are:

1. Determining objective : Determining objective is the first step of risk management function. The objective may be to protect profits or to develop competitive advantage. The objective of risk management needs to be decided upon the management. So that the risk manager may fulfil his responsibilities in accordance with the set objective.

Determining objective is the first step of risk management function. The objective may be to protect profits or to develop competitive advantage. The objective of risk management needs to be decided upon

the management. So that the risk manager may fulfil his responsibilities in accordance with the set objective.

2. Identifying Risks: Every organization face different risks, based on its business, the economic, social and political factors, the features of the industry it operates in - like the degree of competition, the strengths and weakness of its competitors, availability of raw material, factors internal to the company like the competence and outlook of the management, state of industry relations, dependence on foreign markets for input, sales or financiers, capabilities of its staff and other innumerable factors.

3. Risk Evaluation: Once the risks are identified, they need to be evaluated for ascertaining their significance of a particular risk depends upon the size of the loss that it may result in, and the probability of the occurrence of such loss. On the basis of these factors, the various risks faced by the corporate need to be classified as critical risks, important risks and not-so-important risks. Critical risks are those that may result bankruptcy of the firm. Important risks are those which may not result in bankruptcy, but may cause severe financial distress.

4. Development of policy:

Based on the risk evaluation level of the firm, the risk management policy needs to be developed. The time frame of the policy should be comparatively long, so that the policy is relatively stable. A policy generally takes the form of the declaration as to how much risk should be covered.

5. Development of strategy : Based on the policy, the firm then needs to develop the strategy to be followed for managing risk. A strategy is essentially an action plan, which specifies the nature of risk to be managed and the timing. It also specifies the tools, techniques and instruments that can be used to manage these risks. A strategy also deals with tax and legal problems. Another important issue that needs to be specified by the strategy is whether the company would try to make profits out of risk management or would it stick to covering the existing risks.

6. Implementation : Once the policy and the strategy are in place, they are to be implemented for actually managing the risks. This is the operational part of risk management. It includes finding the best deal in case of risk transfer providing for contingencies in case of risk retention, designing and implementing risk control programs etc.

7. Review :

The function of risk management needs to be reviewed periodically, depending on the costs involved. The factors that affect the risk management decisions keep changing, thus necessitating the need to monitor the effectiveness of the decisions taken previously.

INTRODUCTION Bank of Maharashtra

Type. MAHABANK

:-

Public company, BSE & NSE:

Industry industries

:-

Banking, Capital markets and allied

Founded

:-

1935

Headquarters:-.

1501, Lokmangal, Shivajinagar, Pune India.

Key people Director

:-

Sushil Muhnot, Chairman & Managing R K Gupta, R Athmaram, Executive

Directors Products :investment etc.

Loans, credit cards, savings,

Revenue.

:-

^₹60939 million(US$920 million)

Total assets.

:-

₹481 million

Website.

:-

www.bankofmaharashtra.in

Bank of Maharashtra is a major public sector bank in India. Government of India holds 81.2% of the total shares. The bank has 15 million customers across the length and breadth of the country served through more than 1868 branches. It has largest network of branches by any public sector bank in the state of Maharashtra.

HISTORY The bank was founded by a group of visionaries led by the late V. G. Kale and the late D. K. Sathe and registered as a banking company on 16 September 1935 at Pune. The bank was registered on 16 September 1935 with an authorised capital of₹1 million, and began business on 8 February 1936. Bank's financial assistance to small units has given birth to many of today's industrial houses. After nationalization in 1969, the bank expanded rapidly. Shri Narendra Singh who had assumed the office of Chairman and Managing Director from 1 February 2012, left his office on 30 September 2013 on attaining superannuation. Shri Sushil Muhnot is the new Chairman and Managing Director.

Autonomy of the bank The bank attained autonomous status in 1998. As a result, the bank has limited interference of Government bureaucracy in its decision making process and internal affairs.

Other attribute Convener of the State Level Bankers Committee.*.Offers Depository services and Demat facilities at 131 branches.*.Has a tie up with Life Insurance corporation of India and United India Insurance company for sale of insurance policies.*.Has achieved 100% CBS enabling anytime anywhere banking to its customers

Log The logo is made of the following items:*.The Deepmal with its many lights rising to greater heights,*.The Pillar - symbolising strength,*.The Diyassymbolising services,*.The three Ms - symbolising mobilisation of money, modernisation of methods, motivation of staff.The Press

The bank attracted negative media attention in June 2013, when newspapers reported the story of victimisation of the bank's exDirector Shri Devidas Tuljapurkar, who had in October 2012 written to the RBI Governor Dr D. Subbarao regarding fraudulent loans given by the bank. [3]The complaint was unwittingly forwarded by the governor to BoM management, which then started alleged harassment of Tuljapurkar, showing the absence of a safe whistle blower policy in the bank.

Risk Management practices in Bank of Maharastra 7.1 Credit Risk: The Bank has put in place a robot Risk Management Architecture with due focus not only on capital optimization but also on profit maximization, i.e. to do maximum profit or return on equity. Bank is benchmarking on globally accepted sound risk management system, conforming to Base II framework, enabling a more efficient equitable and prudent allocation of resources. In Capital Planning process the Bank reviews:  Current capital requirement of the Bank  The targeted and sustainable capital in terms of business strategy and risk appetite. Capital need and capital optimization are monitored periodically by the Capital Planning Committee comprising Top Executive Sensitivity analysis is conducted quarterly on the movement of Capital Adequacy Ratio, considering the projected growth in

advances, investments in Subsidiaries/ Joint Ventures and the impact of Base II framework etc. The Committee takes into consideration various options available for capital argumentation in tune with business growth and realignment of Capital structure duly undertaking the scenario analysis for capital optimization. CRAR of the Bank is projected to be well above the 12% in the medium term horizon of 3 years, as prescribed in the ICAPP Policy.

7.2 Strategies and processes In order to realize the above objectives of Credit Risk Management the Bank prescribes various method for Credit Risk identification, measurement, grading and aggregation techniques, monitoring and reporting, risk control / mitigation techniques and management of problem loans/ credit . The Bank has also defined target markets, risk acceptance criteria, credit approval authorities, and guidelines on credit origination / maintenance procedures. The strategies are framed keeping in view various measure for CREDIT RISK MITIGATION, which includes identification of thrust areas and target markets, fixing of exposure ceiling based on regulatory guidelines and risk appetite of the Bank Concentration Risk, and the acceptable level of pricing based on rating.

To have focused attention to large Corporate, specialized branches wiz, Prime Corporate Branches have been set up in major centre. Further, Retail Hubs have category of specialized centres for promoting and monitoring SME lending business. These specialized centres are also intended to effectively manage and monitor their respective portfolios. In order to improve the quality of appraisals and to ensure accelerated response to customers, particularly in respect of high value credits, relationship and appraisal functions are segregated between the concerned branch and the Core Credit Groups at Circle Office. Large value corporate exposures are legally monitored through specified branches.

7.3 MITIGATION OF CREDIT RISK Mitigation of credit risks and enhancing awareness on identification of appropriate collateral taking into account the spirit of Base II / RBI guidelines and Optimizing the benefit of credit risk mitigation in computation of capital charge as per approaches laid down in Base II / RBI guidelines. The Bank generally relies on Risk Management techniques like Loan participation Ceiling on Exposures, Escrow mechanism, Forward cover, higher margins, loan covenants, Collateral and Insurance cover. Valuation

methodologies are detailed in the Credit Risk Management Policy. Bank accepts guarantees from individuals with considerable net worth and the Corporate. All types of securities eligible for mitigation are easily realizable financial securities. : Mitigation Techniques The Bank is required to have a system for monitoring the overall composition and quality of the various portfolios since credit related problems in banks is concentration within the credit portfolio. It can take many forms and can arise whenever a significant number of credit have similar risk characteristics. Such measures will include a. pricing for additional risk, b. increased holdings of capital to compensate fot the additional risk, c. making use of loan participation in order to reduce dependency on a particular sector of economy of group of related borrowers. d. Fixing exposure limits for borrowers and for various industrial sectors e. Collateral security in addition to main securities stipulating asset coverage ratio on case to case basis f. Personal Guarantees / Corporate Guarantees having reasonable net worth.

7.4 MARKET RISK : The overall objective of market risk management is to create shareholder value by improving the Bank’s competitive advantage and reducing loss events.  While overall leadership and control of the risk management framework is provided by Risk Management Wing, the business units are empowered to set strategy for taking risk and manage the risk.  All issues or limit violation of a pre-determined severity (materiality, frequency, nature) are escalated to the Risk Management Wing where the actions to address them are determined by the appropriate authorities. The business units are responsible for implementing the decision taken.

The process aims to  Establish a pro active market risk management culture to cover Establish a pro active market risk management culture to cover market risk.  Developing consistent qualities in evolving policies & procedures relating to identification, measurement, management, monitoring, controlling and reviewing of Market Risk.

 Establish efficient monitoring mechanism by setting up a strong reporting system.  Adopt independent and regular evaluation of the market risk measures.

7.5 OPERATIONAL RISK The Operational Risk Management process of the Bank is driven by strong organizational culture and sound operating procedures, involving corporate value attitudes, competencies, internal control culture, effective internal reporting and contingency planning.

CHAPTER 2 REVIEW OF RELATED

LITERATURE

INTRODUCTION The purpose of review it ‘to view again’ in new perspective past investigation in the chosen field and protected further in new directions, in greater depth to what is still in known and untested the researcher to define the limits of his field it helps the researcher to delimit and define his problems. Such a review help us to avoid unnecessary duplication it thus enables the researcher to evaluate and interpret the significance of its findings and also provide hypothesis and helpful suggestions investigation in the light of studies already conducted in his or her field.

Review of books 1. Title : Asset Liability Management Author : T. Ravi Kumar Imprint : Vision Book About the Book The face of Indian financial sector changed forever with initiation of economic reforms in 1991. Deregulation and integration has led Indian banks

and financial institutions into competition both on the assets side as well as the liabilities side of the balance sheet, forcing them to assume greater and newer risks in their quest for higher returns.

2. Title : Guide To Risk Management In Imports And in INDIA Author : Ajay Gupta

Publisher

: Wolters Kluwer India Pvt Ltd

About the Bank Every organization is exposed to uncertainties involved in imports/exports. Growing free trade agreements and internationalization of commodities due to outsourcing of intermediaries has forced even the most conservative organizations to imports raw

materials, components and intermediaries , so as to remain cost effective and competitive.

BENEFIT OF RELEVANT STUDY Going through various topic of research work, the researcher got some ideas and techniques of the research work there has been a lot of research work done in various field of management, through such reference work, the researcher has ,made to contemplate and found that this topic of risk management was not taken up so fair. As such interest in this topic grew stronger. Most importantly this study generated a good feeling regarding research work. It was felt that It of scope there to conduct research work.

CHAPTER 3 Research and Methodology

INTRODUCTION Research has proved to be an essential and powerful tool in leading man towards progress it is consider to be as formal, systematic intensive process of carrying on the scientific methods of analysis research is a more specialized phase of scientific methodology. It emphasis is on scientific generalizations that can be applied to be solutions of wide range of problems therefore it is based on observable experience, it demands accurate observations and description.

Research design and its needs Planning and designing of all the procedures and methods to be used in the research works helps to achieve economy in time and coordination of efforts, the selection of research design depends on the objective of the study, variable and conditions under which it is conducted . It helps the researcher to organize his ideas in a form, whereby it will be possible for him to look for flaws and inadequacies.

Research methodology There are three categories given below : 1. Historical research 2. Experimental research and 3. Descriptive research From the above categories descriptive research is used for research work. DESCRIPTIVE RESEARCH. It is used to present a broad range of activities that have in common the purpose of describing situations .the descriptive investigation are of immense value in solving various problems . There are several types of descriptive research which are as follows: 1. Survey type

2. Casual comparative 3. Correlation study 4. Development study 5. Case study

Methodology of the present study The main aim of the present research is to study “risk management. A Case study on risk management” Under descriptive method the researcher has adopted survey method enables the use of data gathering instruments and tools like questionnaire. These studies are designed to obtain pertinent and precise information concerning the current status of phenomenon and whenever possible, to draw valid general conclusion for the facts discovered.

Tools of research The quality of research work depends not only on adequacy of the research design, but on the suitability of the tools and technique employed. Tools vary on what exactly is to be measured. The major data gathering tools of research are : 1. Questionnaire

1.Questionnaire “In general the word questionnaire refers to a device for securing answer to the questions by using form which the respondent fills in himself.” .W.J.Goode and P.K.Hatt. Questionnaire is the most flexible tool. It is easy to administer and easy to plan. It is used to obtain facts about current condition and practices.

Tools preparation The tools chosen for the research work was questionnaire. It consisted of two questionnaire forms which are asked to manager of bank and asked to customers . A list of 5 questions are included in case of risk management point of view and 10 questions from customers point of view.

Conclusion: Once data is collected the most crucial step is to give some meaning some meaning to the collected data here to arrive at result with the help of collected information, a researcher needs to organize process and interpret them. Organizations and processing of data need to help of statistical techniques. The researcher adopted the descriptive survey method because the method information was very much depending upon the responses of the sample under survey. The tool used for collecting information is questionnaires.

CHAPTER 4 DATA Analysis And Interpretation

INTRODUCTION Data analysis is critical to the management of risk and the oversight of claims handling. Understanding a program’s experience sets the direction for future action by outlining what has occurred, where the program stands today (the current baseline), and what opportunity. Data analysis as a discipline contains three interrelated components  Process Management  Data  Analysis

Process management provides the frame work for initiating and directing a data analysis project. A widely accepted approach within the discipline is the Cross Industry Standard process of Data Mining (CRISP-DM). A complete explanation of the steps in the steps in the process and supporting documentation can be found at http://www.crispdm.org/ . Aside from a frame work data analysis requires a solid foundation, which is the data itself. Previous articles have outlined the data life cycle (Higdon, Keith M., “Understanding the Data Lifecycle, “John Liner Review , Vol, 24, NO. 1, Standard Publishing Corp, Boston, MA, Spring 2010) and its five stages. 1. Capture 2. Storage 3. Access 4. Analysis 5. Deployment When considering a data analysis project, understanding the first three stages of the lifecycle create the foundation by setting boundaries around what is currently possible. The purpose of this article is to expand on the processes within stage 4 (analysis) with additional considerations for making the act of solution deployment (stage 5) have a more practical impact. By having a better understanding of the methods of analysis, metrics commonly used in data analysis and statistical techniques, risk management departments will be in a better position

to assess their need for analysis, to indentify the resources and commitment necessary to design and implement a data analysis project, and to set appropriate expectations as to the usefulness of the information obtained.

MANAGER QUESTIONS NAME OF MANAGERBRANCH- Dombivli (WEST) 1.What challenges are you looking for this bank risk manager position?

= The current scenario lays greater focus on selection of borrowers right deployment of resources better asset and liability management of NPA and arresting fresh inflow to NPA.

2. How do you integrate risk management with the corporations strategic direction and plan? = In emerging like India medium and large industries play a dominant role in hosting the GDP of the country.

3. Are you taking the right amount of risk? = At a time when a economy scenario is in subdued condition there is greater responsibility on to focus correctly of the sector to ejaculate the business of the bank.

4. How effective is your process for identifying, assessing and managing business risk? = The need of the art is to have greater focus on proper identification of quality credit proposals through identifying of quality credit proposals through identifying assessing coordinating credit risk.

5. Do people in the organization have a common understanding of the term?

= Yes, training imports are divide in such a manner taking into A/c present future requirements to that skills are sharpened to effectively meet the challenges ahead

6. How is risk management co-ordinated across the organization ? = Various credit management program are conducted at various levels to arrived to be useful in managing the credit portfolio.

7. How do you decide what information on risk you should publish? = Business is abandoned in the market place but what need to be analyzed will be ability of the bank to publish accurate figures.

Suggestions for Bank of Maharashtra  The Bank should strive hard to establish strong credit system and controls. This should cover loan approvals, loan rating and review and portfolio management. Control should be rigorously implemented to ensure effectiveness. The lending policy exceptions should be brought down to rare minimum.

 Properly orientation of entrants in credit functions.  In credit rating maximum weightage is given on subjective parameters than of statistical, this should be corrected.  Various innovative marketing strategies should be employed by the marketing staff so that they are in a position to convert more of their deposits into advances.

CHAPTER 5

Summary finding recommendation and conclusion

Conclusion

Risk management liability is a topic that is often among people working with non profit and charitable organization. We conducted research to learn more about the strategies and procedures that some non profit and charitable organizations use to deal with risk. We found out that, among the organization are surveyed, less than half (46%) had a risk management plan in place. Yet, each organization faces different risks and should plan and implement different ways to deal with those risks. Each nonprofit and charitable organization is complex and unique, so one-size fits-all risk management programs are not possible. The experience and knowledge of volunteers, board members, and staff should be the basis for developing a sound risk management program. In this planning guide we have suggested that risk management plans must include financial management, board governance and management, volunteer management, and insurance. Most of our respondents indicated that they included one or more of these components in there risk management activities. Risk management is the thoughtful process of recognizing and controlling risks so you can protect and conserve resources. It should cover all aspects of your organization including its mission, goals, activities, staffing and funding. Risk management can be incorporated into general program planning. When you decide on goals for the organization and the activities needed to achieve them, include risk management in your plan. It is better to plan for risk than to deal with problems.

BIBLIOGRAPHY Books  RISK MANAGEMENT REFERENCE BOOK

WEBLIOGRAPHY   www.google.com   www.riskmanagement.com   www.bankofmaharastra.com

Appendix 1 Respondent’s Profile Name: ____________ Age: ____________ Gender (M/F):____________ Profession: ___________ Organisation: _______________

QUESTIONNAIRE: 1. Does your organization have a documented risk management policy? a. Yes b. No

2. In pursuing organisation objectives, you view risk as? a. A threat b. An opportunity

3. How important is effective risk management to the achievement your organizations objectives? a. Very important b. Important c. Not at all

4. Effective risk management can improve your organization's performance a. Strongly disagree b. Disagree c. Neutral d. Strongly agree e. Agree

5. Has training been provided by your organization on? a. Risk b. Risk policy, procedure and practices c. Risk taking

6. What tools and techniques do you use for identifying risk ? a. Audits or physical inspection b. Brainstorming c. Examination of local/overseas experience d. SWOT e. Interview / focused group discussion f. Judgemental g. Surveys questionnaire h. Scenario analyzing i. Operational modelling j. Past organizational experience k. Process analysis

7. Type of model used for risk management. a. Manual b. Risk Assessment Model (A.S.M) c. Small Value Model d. Portfolio Model

8. Monitoring the effectiveness of risk management is an integral part of routine management reporting. a. Strongly disagree b. Disagree c. Neutral d. Strongly agree e. Agree

9. Are the risk management process with in your

organization subject to audit or other quality assurance mechanism? a. Yes b. No

10. Your organization is able to allocate appropriate resources in support of management policy or practices? a. Strongly disagree b. Disagree c. Neutral d. Strongly agree e. Agree

11. Overall, at what stage of risk management practices developments do you consider your organization to be at: a. Best practice b. Well Developed c. Reasonably Well Developed d. Basic e. Non Existent

12. In the last 5 year the level of risk faced by your branch has: a. Increased b. Decreased c. Not Changed

d.

Not Sure