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A Critical Study on Risk Management and Bank Performance: A
Case study of Union Bank of India
Abstract
In the earlier period, people restrained from banking activities due to less knowledge,
ignorance and fear. But now, banks have become an inevitable part of every person’s day‐
to‐day life and in the world’s economic development. Banks have stimulated the habit of
financial savings and have increased the transaction capacity of every people by providing
loans and other credit facilities. This activity has led to risk exposures to the bank and its
customers and simultaneously, to the concept of Risk Management. This research has
concentrated on the subject of Risk Management and its relation with performance in the
Banking sector. The researcher has carried out this project by taking Union Bank of India as
the subject matter of study. Through this study, the researcher has tried to analyze various
types of risks and the impact of such risks on the banking industry. Also, the researcher has
studied the importance of risk management and Enterprise risk management. As part of the
research, the researcher has done quantitative and qualitative analysis by conducting
Interview with 2 managers of UBI and Survey with 50 staffs of UBI. The results obtained
have been depicted with the help of Pie Diagrams. These results reveal that the subject of
study has great influence on the decisions made by Customers in banking sector. Since the
interview was conducted with only 2 managers, there are chances for diverse reviews from
other people related to UBI and banking industry. Hence recommendations have been
provided for further improvement of Risk Management in UBI and related banking activities.
Abstract.............................................................................................................................1
Chapter 1...........................................................................................................................3
Introduction.......................................................................................................................3
1.1 Background of the Study ...................................................................................................... 3
1.2 Statement of the Problem .................................................................................................... 4
1.3 Objectives of the Research ................................................................................................... 5
1.4 Research Questions.............................................................................................................. 5
1.5 Significance of the Study ...................................................................................................... 5
1.6 Scope and Limitation of Study .............................................................................................. 6
Chapter 2...........................................................................................................................6
Literature Review ..............................................................................................................6
2.1 Definition of Risk.................................................................................................................. 6
2.2 Risk Management in Banking ............................................................................................... 7
2.3 Importance of Risk Management in Banking......................................................................... 8

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2.4 Categories of Risk Management ........................................................................................... 8
2.5 Major Risks Faced by Banks.................................................................................................. 9
2.6 Enterprise risk management:...............................................................................................12
Chapter 3.........................................................................................................................12
Methodology...................................................................................................................12
3.1 Definition of research methodology ....................................................................................12
3.2 Research Philosophy ...........................................................................................................12
3.3 Research Approach..........................................................................................................14
3.4 Research Method ................................................................................................................15
3.5 Research Strategy................................................................................................................16
3.6 Data Collection....................................................................................................................16
3.7 Sampling .............................................................................................................................17
3.8 Pilot Testing ........................................................................................................................17
3.9 Ethical Issues.......................................................................................................................17
Chapter 4.........................................................................................................................17
Data Presentation and Analysis........................................................................................17
4.2.1 Questionnaire for the Managers of the Bank (Interview Analysis).................................... 18
4.2.2 Questionnaire for the staffs of the Bank (Survey Analysis)................................................ 20
Chapter 5.........................................................................................................................26
Results and Discussions ...................................................................................................26
5.1 Introduction ........................................................................................................................26
5.2 Analysis of collected data....................................................................................................26
5.3 Effective Risk management strategy of Union Bank of India ................................................28
5.4 Conclusion...........................................................................................................................29
Chapter 6.........................................................................................................................29
Conclusions and Recommendations.................................................................................29
6.1 Introduction ........................................................................................................................29
6.2 Conclusion...........................................................................................................................29
6.3 Evaluation of Results...........................................................................................................30
6.4 Recommendations: .............................................................................................................30
6.5 Future Work........................................................................................................................31
APPENDIX ........................................................................................................................31

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Chapter 1
Introduction
1.1 Background of the Study
The financial crunch that occurred in the last decade was really appalling; the impacts of the
same were truly invasive by nature, and it did not leave out any businesses untouched.
However, the severe impacts were in the financial sector, and notably in the banking
segment. Greuning and Bratanovic (2009), points out that, this sector not only saw the
striking departure of the famous financial establishments such as ‘Leman‐Brothers’ and
‘Bear Stearns’, but also became a frequent object for stern rules, policies, public rage and
theoretical denigration. One significant feature that got due attention during this financial
crunch is the ‘risk management discourse’.
According to Kenett and Raanan (2009), Risk management has become a significant tool, by
which banks attempt to accomplish authenticity, in front of the general public and the
regulators. This ‘activating’ influence has provided the stakeholders of the ‘Indian Banking
Industry’ the grounds not only to take into account the income, but also judiciously assess
the structure applied to control the possible risk factors, and thus to protect their business
interests. The key reason for this is the fact that the flaws of the regulatory measures and
the ‘risk management practices’ were reckoned as the causes for the collapses that came to
pass in this particular industrial segment in the contemporary period.
Russil (2010) states that the severe affect of the financial crunch were seen on the ‘banking
sector; some of the banks announced that they are losing their grounds, whereas some
other banks said that their hand have already burnt. Various reasons were listed for the
same, and the restricted ‘risk management’ while granting loans were one of them. The key
reason for this was the bank’s inability to persuade the borrowers in making positive
business decisions; the banks were interested only in gaining the ‘interests’ on the given
loan amounts. They were unable to calculate the business viability. Here the fundamental
rules of ‘risk management’ were violated.
Numerous causes have been suggested by researchers, for the worsening of the banking
sector, as far as ‘loans’ and ‘advance’ segments are concerned. The causes include the
enhanced ‘fund costs’, ‘price increases’, the drop of ‘Cedi’, as well as the hold‐ups in paying
the contractors and similar agencies. The modern financial restructurings, enhancement in
budget deficit, and the recent ‘oil fund’ will certainly draw foreign investments, and will
make the financial activities of the country ‘bright and breezy’. Greuning and Bratanovic
(2009) mention that the crave for credits will surely get enhanced, and banks will have to
concentrate on creating a ‘resourceful’, ‘successful’ and ‘adaptable’ banking system; this is
imperative for maintaining growth and to control the related risks. Hence, banks will have to
maintain an appropriate balance between the ‘risk management’ and the ‘growth’ process.
This can be done by:

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• Making sure that the system is transparent in all establishments and as far as the risk
factors are concerned.
• Establishing vital risk governing arrangement.
• Classifying and fulfilling the bank’s risk crave.
• Infusing intense ‘risk culture’, concentrating on maximising the ‘risk‐return’ balances
within a distinct ‘risk’ plan.
Even though novel possibilities have cropped up for banking establishments, there are
various involved risks also, which banks will have to tackle. By utilizing the aforementioned
theory, banks can augment their ‘asset’ quality and the ‘risk management’ policies.
1.2 Statement of the Problem
Many researchers reckon ‘risk management’ as a benchmark for ascertaining the ‘success’
or ‘failure’ of all financial institutions. The main objective of this research is to create an
awareness regarding the ‘risk management’, as far as financial institutions are concerned.
A close examination of the ‘risk management’ structure of ‘Union Bank of India’ reveals the
capacity of the bank in tackling the various intrinsic risks that were part of its business
dealings. It is a fact that the key objective of all businesses will be to enhance the
stakeholders’ wealth, and to amass large profits, for launching novel products or for further
company expansion.
It should be mentioned that, as far as the banking sector is concerned, the main area that
will downsize the profit margin is the ‘risk management’ section that covers the ‘credit’,
‘market’ and ‘operational’ segments. This study focuses the real causes of risks and the
ways with which the risks can be controlled effectively.
According to common conviction, the banking industry in India is comparatively steady, and
different banks are having high‐quality ‘risk management’ structures. Even during the global
financial crunch period, these banks were not losers. Nevertheless, this industrial segment
saw the ‘asset deterioration’ of the banks which occurred due to various fiscal factors such
as ‘fall of local currency’, ‘price rises’ and the ‘interest rates. However, according to the
regulatory authorities, the Indian banks have not breached any of the cautious
arrangements that were created for safeguarding the interests of both the shareholders,
and the customers, as happened in many other countries.
There were no incidents to determine the toughness of the banking sector to overcome
severe upsets. Hence, to assess the current strength of the Indian banking sector, a
comprehensive study will have to be conducted taking into account the ‘risk management’
strategies.

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1.3 Objectives of the Research
The key purpose of this research is to examine the function of ‘risk management’ in the
banking industry, by applying the case of ‘Union Bank of India’. The principal aims of the
research are:
• To determine why the ‘risk exposure’ is increasing in the banking sector.
• To examine strategies used by the banking sector for identifying, assessing and
developing structure for risk mitigation
• To determine relationship between the theoretical and pragmatic ‘risk management’
solutions in the banking sector.
• To recommend tools for ‘credit risk management’ that will assist the bank in
enhancing profitability and performance.
1.4 Research Questions
1. What are the causes for risk development in the banking sector?
2. What is the connection between the ‘resourceful risk management’ and the
‘performance’ of banks, in a global perception?
3. What are the applied methods to distinguish the banking sector risks?
1.5 Significance of the Study
The general anticipation is that the present research will give a hint to the overall ‘risk
management’ scene regarding the Indian banking industry, because, no major dissimilarities
can be pointed out on the subject of the ‘structural’ and the ‘operational’ methods of Indian
banks are concerned. This research will also serve the purpose of a guide, for the future
researches on the same topic. Moreover, this study will also add more value to the research
findings of the former researchers. The research recommendations will also facilitate the
‘risk managers’ in alleviating the possible risks, and thus will help them to enhance the
productivity.
The emergence of new shareholders will be yet another benefit of the study; because, by
implementing proper ‘risk management’ techniques, companies will be able to enhance
profit margin, and this will attract more shareholders, who will buy the share from the open
market, and hence the companies can enhance their share value. Companies will be also
able to achieve the competitive edge over their rival companies. The study will be also

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helpful to all those who want to distinguish the related problems and understand more
details about them.
1.6 Scope and Limitation of Study
Every company will be familiar with the term of ‘risk management’ especially companies in
the financial industry. This will include many from the financial world like ‘finance houses’,
‘investment banks’, ‘financial institutions’, ‘banks’, as well as ‘non‐bank’ insurance
companies. Nevertheless, the present research deals with the banking sector only.
In the study on the risk factors of ‘Union Bank of India’, the needed data was collected by
surveying 50 staffs and interviewing managers of 2 branches of Union Bank of India to get to
know detailed information about the involved risks and adopted strategies and how they
affect performance of bank. As due to time limitation, only two managers and only 50 staffs
could be interviewed and surveyed the results may not be able to be generalized and thus
can affect the reliability of the data.
Chapter 2
Literature Review
2.1 Definition of Risk
The connotation of risk may vary according to the nature of industry. While in the ‘safety’
and ‘health’ sectors, the term is connected to the probable perils and vulnerabilities, when
it comes to the financial industries, the term acquires a new practical meaning, which is
more or less connected to the ‘volatility’ with respect to the anticipated results, both in
constructive and unconstructive ways. According to Bouteille and Coogan‐Pushner (2012),
as far as all other industries and political backgrounds are concerned, ‘risk’ is somewhat
connected to the soul of the establishment and the ‘product pricing’. Bessis (2010) is of the
view that the perception of the viewer will decide the ‘risk factor’; according to him, in
reality, risk does not exist, albeit risk exists everywhere. Gabriele (2009), points out that,
‘risk’ is the vague factor which is discounted for an unsought happening. In fact, risk is par
for the course of life and can be linked with the decision‐making process of human beings.
Very clearly it can be seen that, in the last couple of decades factors such as the ‘risk study’
and ‘risk management’ activities have turned out to be imperative factors for all
establishments, both financial, as well as non‐financial. All organizations will have to face
diverse kinds of risks, and as a matter of fact, there are two divisions for this; the
operational and the financial (Gabriele, 2009).

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Operational risks: As mentioned by Soprano and Crielaard (2009), this one is also termed as
the ‘business risks’. This is basically concerning the vagueness or ambiguity concerning the
various ‘investments’ and the ‘investment opportunities’ of a company, and these will be
subjective to the specific market conditions, in which the company floats its products.
Financial risks: These are primarily connected to the existing fiscal scenario that includes the
interest rates, exchange rates, oil price, etc. Financial risks are more market oriented
(Greuning and Bratanovic, 2009).
However it should be also mentioned that both of these risk factors will influence the
working patterns of a firm, and thereby, its market value.
2.2 Risk Management in Banking
The concept of ‘risk management’ got developed as one of the diverse banking activities
that are connected to the various factors of loan management, but at a later stage was
transformed into the modern set of different processes and tools. This highlights the fact
that the continued existence of all establishments purely depends on its skill to expect the
imminent changes and to get prepared for the same, and not in waiting for the change to
occur and then to react accordingly (Joel et.al, 2011).
Bessis (2010) explains that risk in linked with ambiguity, and will also depend on the changes
that come to pass in the fundamental structure, and as far as businesses are concerned, this
is the ‘change in resources’, which in fact is the shield that safeguards the establishment
liability. The risks are interconnected and when a particular part is affected, then obviously
the consequences will influence the other areas. Hence, it is imperative that all concerned
parties must comprehend the actual risks faced by the banks, and must make sure to tackle
them effectively.
It should be also noted that the risk factors and leeway for risks will get changed with each
individual transactions that the banks undertake, and therefore, it is simply impractical to
get a ‘real‐time’ risk profile of banks. Oyungerel (2010) points out that the ‘risk
management’ is the various control measures that are enforced to trim down the downbeat
influences that crop up due to indecision or vagueness in decisions. Joel et.al (2011) is of the
view that ‘risk management’ is a methodical method for classification and assessment of
loss disclosure, experienced by an establishment or a person, and for choosing and
implementing an apt method for solving the same.
The method entails certain functions such as the ‘classification’, ‘assessment’, and
‘controlling’ of the risks. Bessis (2010) further states that risk management also require
certain tools and benchmarks for gauging and managing the risks. According to the findings
of Apostolik et.al (2009); the aims of risk management include the reduction of foreign
exchange deficits, decrease of the instability in ‘cash flow’, safeguarding the revenue

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variations, enhancing productivity and generating a guarantee of company survival. Some
other researchers have pointed out that ‘research management’ is the process of facing the
risks with full awareness, clear out objective, and comprehension in order to gauge them
effectively, and tone down the severity, and thus to prevent the possible setbacks.
It is imperative that the managers require dependable ‘risk covering’ measures, to make
sure that the banks function in a positive ‘risk management’ atmosphere (Oyungerel, 2010).
In order to be inside the threshold, as defined by the internal studies and the stipulations of
the controllers, the bank management requires estimation regarding the possible deficit.
Banks should also possess methods to check the condition and develop inducement modes
for encouraging practical ‘risk taking’ behaviours of groups, as well as individuals.
Russill (2010) points out that ‘risk management’ is a method, through which managers fulfil
these requirements, by ascertaining the principal risks, attaining constancy, effective risk
management ways, fixing methods for trimming down the possible risks, deciding when and
what to augment and methods to check the ensuing risk conditions. Bessis (2010) is of the
view that the objective of ‘risk management’ is to gauge the possible risks, for the purpose
of checking and managing them, and to make the bank capable of doing other significant
roles, other than the normal financial transactions.
2.3 Importance of Risk Management in Banking
The main intention of bank management is to increase the profit by considering risks that
may occur. For this efficient risk management methods are necessary. Risk management
can be referred as the effort taken with the intention of minimisation of is the volatility of
profit which lowers the shareholders’ wealth. The importance and reasons for managing risk
in banks is described by various researchers like Sheng (2012).
Four main rationales for risk management as understood from previous researches are the
interest of managers’ to protect their position in the company, the intention to reduce the
tax burden, the cost of probable financial distress and last but not least companies’ want to
avoid low profits which will force them to seek external investment opportunities (Bessis,
2010).
The above described reasons motivate or force management to be careful about risks and
go for thorough assessment of the level of risk associated with financial products and
potential risk mitigation methods.
2.4 Categories of Risk Management
One of the key aspects of financial institutions like banks is the bundling as well as
unbundling of risks. Nonetheless, not all the risks in their business should be tolerated

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directly by them. It is possible to transfer some of the risks and some of the risks can be
completely eliminated. The risks can be categorized considering their nature, so that it is
helpful for adopting appropriate methods for dealing with them. The types of risk as
classified by Oyungerel (2010) are a) risks that can be avoided or eliminated by simple
business methods, b) risks that can be transferred to others and c) risk that must be
managed at the firm level. Avoiding risk altogether by business practices has the goal of
ridding the bank of risks that are not essential to the services provided or absorbing on the
optimal quantity of a particular kind of risk. This is done by involving in activities like
underwriting standards, hedging, diversification, reinsurance and due diligence investigation
to minimize the chances of idiosyncratic losses by removing risks that are superfluous to the
operation of bank.
2.5 Major Risks Faced by Banks
Banking can be referred as the intermediation between financial savers and funds seeking
business entrepreneurs. During the procedure of offering financial services, banks face
different kinds of financial and nonfinancial risks (Bessis, 2010).
Different researches grouped these risks on the basis of different frameworks. Among them
the common ones are credit risk, market risks (like interest rate risk, liquidity risk, and
foreign exchange risk), reputational risks and operational risks (like legal risk and strategic
risk).
i) Credit Risks
The analysis of financial security of borrowers has been main activity of banks since its
beginning and is now referred in the name Credit risk. It can be said that, the risk of
counterparty failing to complete the obligation owed to the creditor. With increase in
derivatives markets credit risk has also been increased (Sheng, 2012). The cost of replacing
cash flow when the counterpart is default is also defined as credit risk.
In Elmer Kunke Kupper’s article on Risk Management and Banking, credit risk is defined as
the potential financial loss resulting from customers’ failure to honour the terms of contract
or loan (Greuning and Bratanovic, 2009).
To make best use of a bank’s risk adjusted rate of return through retaining credit risk
exposure within suitable parameters is the main aim of credit risk management. Credit risk
is the main reason behind losses and failures of banks since usually, about 70% of banks’
balance sheet relate to credit risk. It is widely known that, lack of credit risk diversification is
the main reason for bank failures.
Market Risks

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The risks that are posed to earning that arise from changes in the basic economic elements
including interest rates, exchange risks, commodity prices etc is generally referred as market
risk, as defined by Elmer Funke Kupper in this article on ‘Risk Management and Banking’.
The banks are prone to market risks in both the aspects of management of their balance
sheets as well as their trading operations. The three major prominent market risks include
liquidity risks, interest rates and foreign exchange rates.
ii) Liquidity risk:
If any banking firm lacks its potential to accommodate the redemption of deposits as well as
other liabilities, the bank is said to be in liquidity risk and if the bank is able to acquire to
derive funds, it is said to have adequate liquidity potential (Greuning and Bratanovic, 2009)
and as referenced by the researchers, the funds can be raised through the enhancement of
liabilities, selling assets, securitising etc.
Bessis (2010) gives a description of the three different situations where liquidity risks are
involved. The first case is when the bank finds it difficult to raise the funds at a reasonable
cost; the second case is to consider liquidity risk as a safety cushion that helps in the gaining
of time under tough situations. The third situation is when the organization faces large
losses that may result in the creation of liquidity issues.
As opined by Bessis (2010) the liquidity risks of the banking firms are influenced by a
number of factors, which can have impact on the balance shared between liquidity risks and
liquidity creation.
iii) Interest Rate Risk:
The potential for the changes in the interest rates in reducing the earnings of a bank or its
value is referred to as interest rate risk. The management of interest rate risk has become a
major challenge because of the factors including volatile interest rate environment, growing
array of on and off balance sheet products, deregulation etc. However, the interest rate risk
is easily manageable for the banks through the informed use of interest rate derivatives
(Greuning and Bratanovic, 2009).
As referenced by the researchers, there are four common sources of interest rate risk and
these include repricing risks, basis risk, yield curve risks as well as optionality (Sheng, 2012).
The management of interest rate risk includes a combination of different policies,
techniques as well as actions that are used by the banking organizations so as to reduce the
risks.
iv) Foreign Exchange Risk:
The unexpected alterations occurring in the exchange rate that leads to the modification of
the amount of home currency leads to the foreign exchange risk. As defined by Bessis

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(2010), incurring losses that arise because of the changes in the rates of exchange is
referred to as foreign exchange risk. The mismatch that exists between the asset value and
the capital is considered to be a major reason for the foreign exchange risks, says Bessis
(2010). As pointed out by Greuning and Bratanovic (2009), based on the direction of the
shifts of exchange of rates, foreign exchange risk can either result in loss or gain.
v) Operational risks
The inadequacy or failure of the internal processes, individuals, systems, external events can
sometimes lead to loss that may be direct or indirect and these types of risks are generally
classed under operational risk (Bessis, 2010). As justified by Greuning and Bratanovic (2009),
the operational risks are also assumed to be resultants of the impaired information systems,
internal monitoring rules, failure in internal systems or the reporting systems. The different
levels of appearance of operational risks include individual level, processes level as well as
technical level. The researchers also highlights various aspects including developments in
modern banking organizations, advancements in technological aspects, growth of e‐
commerce as major reasons for the enhanced operational risks in banks (Coulbeck, 2010).
vi) Strategic risks
As defined by Franzetti (2010), the array of events and trends that are potential enough for
devastating the shareholder values or growth trajectories of a company are compiled
together as strategic risks. Some researchers consider strategic risk as the resultant of
external events, while some other scholars consider strategic risk, as the current effect on
the capital that arise from the internal business actions. As justified by Coulbeck (2010), the
risks that are resulted because of the exploitation of the opportunities by any business
organization are known as strategic risks. However, in every way that represents the
strategic risk, different kinds of uncertainties are included. The embracement of both the
upside as well as downside of the strategic risks is included in the effective strategic risk
management.
vii) Reputation Risks
As put forward by Greuning and Bratanovic (2009) the synonyms of reputation include
‘Emotional Capital’ or ‘Equity’ and these are always prone to risks. It is generally assumed
that the reputation of a company mainly involves the various intangibles elements including
potential future profit steam as well as the value given to its brand. It is also generalized
that the value of intangibles are several times greater than the values of the tangible
factors. Thus, the organizations with good reputation are found to have positive reputation
equity and vice versa. As reported byFranzetti (2010) most of the managers of several

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reputed organizations consider the reputation risk as one of the highly challenging task that
is getting focus and attention by the modern economists.
The sources of reputation risk include the aspects like the intersection of financial
organization and the competitive environment, as well as the direct and indirect network of
controls, behavioural expectations that surrounds the operational environment of the firms.
2.6 Enterprise risk management:
As stated by Segal (2011), enterprise risk management can be considered as an effective
tool for the risk integration and the researchers also highlight the relationship shared
between the risk management at the enterprise level and a number of policy decisions. The
enterprise risk management is equally welcomed by the regulators, rating agencies, board
audit committees, shareholders etc. As reported by protivity (2011), the holistic evaluation
as well as the management of the risks faced by the organizations, are possible through the
implementation of the strategies of Enterprise Risk Management (ERM). Enterprise Risk
Management enables the detailed understanding of the risks that are to be taken into
consideration and the risks that are to be ignored or omitted. Enterprise Risk Management
is also considered to be an efficient tool for the management of different kinds of risks as
well as opportunities associated with the business functions and processes and not just
financial risks, state Segal (2011).
Chapter 3
Methodology
3.1 Definition of research methodology
The methods that are followed during conducting research are referred as research
methodology (Saunders et.al, 2009). In the view of Kothari (2009), methodology specifies
about how to research on a subject and is the roadmap of the research. Research
methodology defines the procedures to be followed in describing, explaining and predicting
phenomena regarding the subject of the study.
Saunders Onion Model will be adopted by the researcher for this particular research.
3.2 Research Philosophy
Research philosophy is an unavoidable part in the research study. According to Saunders
et.al (2009), Research philosophy uses a set of shared assumptions, values and practices
which enables the researcher to collect the important data in an efficient manner and to
gain knowledge on the study.

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Saunders et al (2009) again mentions that Research Philosophy elucidates the research
paradigms or orientations used while conducting the research for understanding the data
associated with the research state. Considering the nature of the research and topic
involved research philosophy is selected by researchers. Research philosophy is mainly of
three types: Positivism, Realism and Interpretivism.
Positivism:
Gulati (2009) explains that the basis of Positivist approach is knowledge gained through
scientific and experimental studies. Intuitions or introspection is avoided while considering
Positivism. It is a main concept used in natural science and is an objective based method.
In Positivism philosophy, it is believed that reality is stable and can be explained from
objective viewpoint. It relies upon scientific and experimental methods (Mennen, 2010).
Realism:
In the view of Johnson and Christensen (2010), Realism explains the human reactions to a
real situation and is based upon the influence of surrounding environment, especially
external. It believes in the persisting surrounding environment.
According to Saunders et al (2009), realism is the belief that entities exist independently of
being perceived, or independently of one’s theories about them. Realism also defines how
people react towards real world situation.
Interpretivism:
Management and business world are considered to be too complex in nature by
Interpretivism. It explains that, as in natural science, theories cannot be formulated in
Interpretivism. It is believed to be the critical side of Positivism and focuses on subjective
interpretations (Bryman and Bell, 2011).
This research philosophy of interpretivism is based on the belief that only through
subjective interpretation reality can be understood. The study of an aspect in their natural
environment is the basis of interpretivism and interpretivist believe that researcher will
definitely influence the study of those aspects (Saunders et al, 2009).
The researcher will be going for interpretivism philosophy for this research as it is good for
understanding risk management in UBI since interpretivism involve subjective
interpretation.

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3.3 Research Approach
Two approaches are commonly followed while conducting research. They are inductive and
deductive approach (Mennen, 2010).
Deductive approach:
Gulati (2009) pints out that Deductive approach develop the hypothesis on the basis of an
existing theory and designs research strategy for testing the hypothesis. Particular aspects
are converted to more general aspects in this approach through path of logics. A test is
conducted to test the hypothesis and the outcome of the test reveals whether to accept or
reject it (Snieder and Larner, 2009). The researcher is kept independent from the study and
only quantitative data are collected and retrieved in deductive approach.
In deductive method, already developed theories related with research topic are taken
(Crossman, 2012). It moves from general to specific and is usually referred as top down
method because of this feature. The approach starts with selection of theory and narrows it
down to hypothesis which is then narrowed to observation.
Fig 1 Deductive Approach
Inductive approach:
Crossman (2012) explains Inductive approach as a bottom‐up approach. It is the reversed
process of deductive approach. Here, the information passes from more general to more
specific form. Qualitative data are collected in Inductive approach. The findings from the
research are generalised rather than keeping quantitative. The researcher is considered to
be a part of study here.
In inductive approach, from specific observation, broad theories are generated and hence it
is named as bottom up method (Blackstone, 2012). Again, Crossman (2012) mentions that
from the initial specific observation, researchers try to detect patterns and formulate
hypothesis, and move on to develop theories or conclusion.
Fig 2 Inductive Approach
Theory Hypothesis Pahern Observaion
Observaion Pahern
Tentaive
Hypothesis
Theory

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For this particular research, the author will be adopting deductive approach as this
approach offer more valid and reliable data which will be more helpful in accomplishment
of the research objectives.
3.4 Research Method
Research method can be indicated as the method adopted for managing and developing
data while conducting research, states Saunders et.al (2009). The kind of data the
researcher needs to gather for the research is also sometimes termed as research method.
Two kinds of research methods are Quantitative and Qualitative.
Qualitative research method:
According to Denzin & Lincoln (2011), Qualitative research method expresses the research
aspects is non‐numerical and descriptive way and it explains the meaning, feeling and
description of situation under study. Qualitative research methods reveals the ‘why and
how’ of decision making.
Johnson and Christensen (2010) are of the opinion that when researcher tries to capture or
understand the estimations, thoughts and visions of people associated with the research
topic, qualitative research method is used. Usually, semi structured or unstructured formats
such as interviews, discussions, case study etc. are involved with qualitative research
(Camerino, Castaner and Anguera, 2012).
Quantitative research method:
As the name indicates, quantitative research measures the aspects related to research in
quantity or in an amount. Both the collected data and the result obtained are expressed in
numbers or quantities. ‘What, when and where’ of decision making is discussed through
quantitative research methods (Denzin & Lincoln, 2011).
In the view of Saunders et al (2009) the quantitative research method can be referred as
systematic collection or research of social aspects with the help of numerical or statistical
data. Following this method enable one to understand views of huge number of people. The
methods usually adopted are cross sectional surveys, online surveys etc. (Johnson and
Christensen, 2010).
While conducting this research, the author will be going for both quantitative and
qualitative research methods. Quantitative method, survey of 50 staffs will be conducted
for understanding more about risk management strategies and banks’ performance.

16. 16
Qualitative method will be adopted by interviewing managers of 2 branches of Union Bank
of India to get to know detailed information about the involved risks and adopted strategies
and how they affect performance of bank.
3.5 Research Strategy
Snieder and Larner (2009) defines Research strategies as the plan of actions which are used
for conducting the research systematically. The researcher carries out the research in a cost‐
effective manner using research strategies. Research Strategy helps the researcher to focus
on the quality of the project.
Creswell (2009) explains the different research strategies to be surveys, interviews, case
studies, observations, focus groups etc. Interview enables direct communication with
respondents who is associated with the topic of the study. Survey method is best for
gathering data from large group of people, so is helpful for gathering generalized data for
conducting interview and survey questionnaire tool is used by researchers.
The author intends to use survey strategy and interview method for understanding more
about the risks, its management and influence upon performance of UBI. Survey is adopted
because it is cheaper and best for collecting data from large sample (in this case 50). The
author intends to interview 2 managerial staffs of UBI as interview enables direct and open
communication between the author and respondents which is good for understanding the
various aspects related with the research topic.
3.6 Data Collection
Data is the quantitative or qualitative raw or unorganized information which is collected to
represent a particular condition or stage in the research (Gulati, 2009). Data collection is
regarded as the most important stage while conducting a research study. Data collection is
concerned primarily with determining the type of information needed for the study and
then collecting information’s for the study.
According to Saunders et.al (2009), the two kinds of data utilized in research are primary
and secondary data. Primary data is the fresh data collected specifically for the research
currently conducting. Secondary data is the data already collected by others which is utilized
for the current research by the author. Some sources of primary data are interview,
observation, survey etc. Websites, articles, journals, books, magazines etc. are some of the
sources generally used for secondary data collection.
The researcher is going to collect both primary as well as secondary data for this research.
The secondary data or secondary research will help in understanding more about the topic
of research which is essential while preparing questionnaire for survey and interview. For

17. 17
secondary data, books, articles, magazines, websites etc. will be referred. Primary data will
be collected from staffs of UBI through survey and managerial employees through
interview.
3.7 Sampling
Lohr (2010) defines Sampling as the procedure of selecting group of people or samples for
collecting data for the specific research and mentions that Probability and Non probability
are the main two kinds of sampling procedures. In probability sampling, each sample has
got equal chance of getting selected as the sample for data collection. Whereas when
applying non probability sampling, only limited individuals will get the chance of getting
selected for data collection. For this research, the author is going to use probability
sampling as staffs for the survey will be selected randomly. Sample size for survey will be 50
and for interview sample size will be two.
3.8 Pilot Testing
Pilot testing is the method of evaluating the tools used for conducting research for avoiding
any kind of error (Saunders et.al, 2009). The author will be conducting pilot testing of the
questionnaire going to be used for interview and survey by distributing it among his friends
and colleagues. And if there are chances of any question posing any kind of
misunderstanding, confusion or ambiguity then it will be changed accordingly.
3.9 Ethical Issues
Saunders et.al (2009) mentions that sticking to ethics are very necessary while conducting
research, as a research is collaborative work involving many people. So if any kind of
violation of ethics happens, then it will affect the accomplishment of the objectives and the
validity of the research. The author will be ensuring that no ethics is violated during the
research.
Chapter 4
Data Presentation and Analysis
4.1 Introduction
It is very essential to collect the appropriate information and data for successfully
completing a research project. According to an early research, data analysis is very
important in all researches and this procedure is essentially varied from the procedure of

18. 18
data presentation (Khan, 2010). So, as soon as the process of data collection is over, the
process of analysing the data is started. This chapter of the project comprises the
assessment with regard to the collected data, which were collected by means of
questionnaire and interviews.
4.2 Data Analysis
Data collection was carried out by the researcher by preparing two sets of questionnaires:
one for carrying out the interview with two managers of the Union Bank of India and the
other one for surveying 50 staffs of the bank. Both questionnaires focussed on the risk
management concept as it is the subject of research.
4.2.1 Questionnaire for the Managers of the Bank (Interview Analysis)
Two managers of the UBI were interviewed for obtaining the qualitative data. The questions
included were related with the topic of research, i.e. about the risk management. The
replies of the managers were very important as they were involved with the risk
management procures of the bank. Given below are the questions and the replies of the
managers regarding the topic of study.
Q1. Has the recession changed the banking sector? If yes how?
Both managers opined that the recession has led to strong emphasis on risk management
and governance. One of the managers further added that staffs need to show that they
understand the current environment and must understand the importance of teamwork for
rebuilding the trust in this industry.
Q2. What credit culture is followed by your bank?
The managers stated that the UBI follows a bottom‐up credit‐culture blend with policies and
practices to attract more investors and customers to the bank. They also added that the
bank has a good Corporate Governance measure to ensure its transparency in working.

Q3. Does the bank have any Risk assessment board to manage Risk management?
Both managers opined that the Bank has a Risk management board comprising of the Board
of Directors for assessment involved in various classes of risks with the Bank. They
mentioned that the Risk assessment board is approved as per the guidelines of Reserve
Bank of India and that the BOD panel is assisted by sub‐committees in various risk
assessment classes.

Q4. What risk management strategies are adopted by your bank?

19. 19
The first manager stated that the Bank has adopted Basic indicator approach in analysing
and meeting with Operational risks. The second manager replied to the latter part by
providing information that the Bank has purchased Kastle Risk Free System to deal with
Market risks and it has Revelus platform implementation based on standardised approach
to deal with Credit risks.
Q5. What primary measures are adopted by your bank for managing risks?
Both managers gave the reply that the Bank adopts Comprehensive systems and
procedures, internal control system and audit as primary measures to manage Risks.

Q6. Is there any quality check for the products of bank, before they get introduced to the
Public?
This answer was provided by the first manager. He replied that every product/service of the
Bank is first presented to the Risk assessment Board to undergo quality check and only
those which pass the test are offered to Public.

Q7. Does the bank utilize any risk mitigation systems to manage its risks?
Both managers replied that together with the comprehensive system of risk management,
the bank institutionalizes comprehensive self‐assessment by preparing road maps to
exercise risk analysis related to every products and services of the bank.

Q8. What actions are followed by the bank to recover its losses?
The second manager replied that the Bank maintains Security Repossession Policy that
recovers the dues and losses when customers are at default. The bank gives one week prior
notice to the customers before proceeding with recovery/possession of securities. He also
replied that the bank’s recovery policy is maintained with fairness and transparency in
repossession, revaluation and realization of securities and doesn’t follow whimsical
deprivation of properties.

Q9. What is your opinion on association of risk management with bank’s performance?
The first manager replied that the financial crisis of 2008 has adversely affected the Bank
performance during the periods after crisis. He mentioned that the Bank underwent
renewal strategies after the crisis and has implemented a good system of Risk management
now. Both managers made the opinion that the implemented Risk management system has
ultimately improved the credibility and performance of the Bank.

Q10. Are there any suggestions to improve current risk management system?

20. 20
The first manager had the opinion that the economic crisis of 2008 has severely affected the
operational efficiency of the bank and risk associated to it and this has to be continually
improved for better risk management. The second manager opined that the Union Bank has
one among the highest NPA’s (Non‐Performing Assets) at 1.8% when compared to other
banks and hence bank credit structure has to be revised. He made the opinion that only
those with good credibility must be allotted with credits from the bank.
4.2.2 Questionnaire for the staffs of the Bank (Survey Analysis)
Fifty staffs of the Union Bank of India were surveyed by distributing the questionnaire for
obtaining the quantitative data. The researcher wanted to assess the opinions of the staffs
and also about the various aspects of risks and the management of risks by the bank. This
questionnaire encompassed the typical questions related to various risks and the
management of these risks by the bank and are summarised below.
1. Mention your Gender.

For obtaining the assessment in a convincing way, the researcher tried to obtain answers
from both the genders. The collected answers reveal that 60% of the participants were from
the male gender and the rest 40% were from the female gender.
2. To which age group do you belong to?
60%
40%
Gender
Male
Female

21. 21

The current age of the staffs is very important while evaluating the survey answers. The
answers reveal that 30% were from the senior section, their average age being 50+. The
other section comprised of middle‐aged employees, age being in the range 25‐60 and their
percentage was 50%. And the third group comprised of people below 25 years, with the
percentage being 20%.
3. How long you have been working with the Bank?

The work experience of the staffs is very important for providing the essential information
required by the researcher for the study. The answers show that majority of the participants
20%
50%
30%
Age
Below 25
25‐50
Above 50
20%
30%
20%
20%
10%
Work experience
Less than 2 years
2‐5 years
6‐10 years
11‐20 years
More than 20 years

22. 22
(30%) had an experience of 2‐5 years. About 20% of the participants encompassed a work
experience in the ranges 6‐10 years, 11‐20 years and <2 years. Only 10% of the participants
had an experience of more than 20 years.
4. What are the credit criteria’s followed by your bank while offering credit?

The above Pie chart mentions that 40% staffs look for the ability to repay loan by the
customer as the main criteria while providing credit facilities. 25% look at the experience
and strength of business whereas 20% look for the reputation and history of applicants.
Only 15% look at the past earnings and strength of business.
5. What kinds of training does your bank provide to staffs prior to evaluation of loan
applications?
20%
25%
15%
40%
Credit Criteria
Reputaion and previous
history of applicants
Experience and strength of
business
Past earnings and strength
of financial statement
Ability to repay loan
10%
25%
35%
25%
5%
Training
Classroom
Departmental
On Job training
Workshops and Seminars
Program instrucion

23. 23
From the above Pie chart, it is visible that 35% of staffs were provided with on job training.
25% opined that they received workshops, seminars and departmental training. 10%
received classroom training and only 5% were admitted to training via program instructions.

6. Could you mention the guidelines while offering credit to Public?

The above Pie chart mentions that 40% staffs do Customer portfolio analysis and 25% staffs
do rating based analysis issued by the Bank while offering credits. Only 10% staffs
emphasise on other guidelines issued by the Bank.

7. What interval period do you follow to inform credit reminders to default customers?

40%
25%
25%
10%
Guidelines for Credit offerings
Customer Poroolio
analysis
Raing based analysis
Sensiivity analysis
Other guidelines
75%
20%
5%
Credit reminder
Within 1‐4 months aper
making default
Between 4 and 6 months of
default payment
Aper 10 months of default
payment

24. 24
From the above chart, it is visible that 75% staffs indulged in Credit related activities inform
the default customers within 1 to 4 months after making the default. 20% staffs inform
customers between 4 to 6 months period after making the default. Only 5% staffs wait for
10 months after default to inform the customer about it.

8. What are the various portfolio diversifications that the bank follows to enhance its
performance and profitability?

The above Pie chart states that 30% of staffs offered housing loans to their customers as
part of portfolio management by the Bank. 20% offered loans to large industries and
factories, 18% offered Vehicle loans and 15% offered business loans. 10% staffs were
indulged in offering personal loans. 4% staffs were carrying out agricultural loans and 2% did
Educational loans. Only 1% staffs were interested in providing Marriage loans to Customers.

9. Mention the securities accepted by the Bank against Credit offered?
10%
15%
4%
20%
18%
30%
1%
2%
Por]olio diversifica_on
Personal loans
Business loans
Agricultural loans
Loans for large industries
and factories
Vehicle loans
Housing loans
Marriage loans
Educaional loans

25. 25

From the above Pie chart, it is seen that 40% staffs accepted land agreements as guarantee
towards credit offered. 30% staffs accepted assets and 15% accepted jewellery as security
towards the credit offered. Share and debentures were taken as security by 10% staffs. Only
55 staffs have collected other securities against credit offered.

10. Do you consider Bank’s risk management to be effective in enhancing bank
performance?

It is visible from the above Pie chart that 65% staffs said that the bank’s risk management
strategy has enhanced its performance. 20% opined that the management strategy for risk
needed improvement. Only 15% were saying that the bank’s risk management did not
enhance its performance.
15%
30%
40%
10%
5%
Security against loan
Jewellery
Assets
Land
Shares and debentures
Others
65%
15%
20%
Opinion about bank's risk
management
Yes
No
Needs improvement

26. 26
Chapter 5
Results and Discussions
5.1 Introduction
In this chapter, the results obtained from data analysis are discussed by the researcher to
obtain a perfect knowledge about the risk management system in Union Bank of India.
5.2 Analysis of collected data
The researcher has considered the Saunders Onion Model for conducting this study.
According to Saunders et.al (2009), the onion model is a generic approach in the research
study to estimate the issues related with data collection and rectify it to carry out the
research methods. Ferrel (2012) explains that the Saunders onion model has six stages to
conduct a research‐ philosophies, approaches, strategies, choices, time horizons, techniques
and procedures.
The researcher has utilized Interpretivism philosophy while conducting this research. Both
Deductive and Inductive approaches have been used to collect Quantitative and Qualitative
data respectively.
5.2.1 Results obtained by qualitative analysis reveal that the recent changes in economic
conditions around the world have been a major reason for increasing risks in banking
industry.
5.2.2 Credit risks remain to be major reason for crisis in banking industry when compared to
other types of risks. Increasing NPA’s have also posed to be a threat to UBI, if not
maintained properly.
5.2.3 It has been also observed by the researcher that the Union Bank of India maintains a
bottom‐up credit‐culture and good corporate governance which has helped the bank to
attract more customers and maintain a balanced relation between the bank and its
customers. The integrated risk management system helped the UBI to ensure that risks are
adequately ring fenced.
5.2.4 The researcher observed that the Risk management system is headed by the Board of
Directors of the bank and the bank utilises the Kastle Risk Free System and Revelus platform
to dela with market risks and credit risks respectively. The Basic indicator approach is
utilised by the bank to deal with Operational risks.
5.2.5 The collected data reveals that every credit application in the bank passes through a
credit check system and only after passing this system, does the application gets sanctioned.
5.2.6 Like every bank, the UBI also comes across default payments and this is met by the
bank using its Credit recovery section. The default payments are first informed by the bank
to its default customers and complete recovery is opted by the bank only by giving prior
notice to these customers.

27. 27
The researcher has conducted Qualitative analysis by interviewing only 2 managers of the
UBI and hence this analysis cannot be considered as a complete one with respect to UBI’s
Risk management system. Only an overall image about the subject is revealed through the
Qualitative analysis. The researcher observed that even though economic crisis affected the
Bank, the management of the bank remains optimistic about regaining the bank
performance in various financial aspects.
The Quantitative analysis has been done by conducting a survey of 50 staffs of The Union
Bank of India and the major inferences from this analysis is detailed below:
5.2.7 The major part of the respondents were Males constituting 60% of the participants.
50% of the total respondents were in the age group of 25‐50, 30% formed part of the age
group above 50 years and the remaining 20% belonged to age group below 25 years.
5.2.8 In the survey, it was found that 30% of total respondent had experience between 2
and 5 years with the bank, 20% has experience less than 2 years, another 20% were
between 6 to 11 and 11 to 20 years experience. Only 10% of the total staffs participated has
experience more than 20yeras with the UBI.
5.2.9 It was pointed out in the survey that 40% of participated staffs looked for the
customer’s repayment ability while providing credit facilities. 25% of participated staffs
looked for the credibility of the business and 20% went for reputation and history of
applicants. Only 15% were concerned about the past earnings of individuals and strength of
business.
5.2.10 The analysis reveals that the bank gives more emphasis for On‐Job training, as 35% of
staffs were provided this training session , when compared to other training sessions. 25%
of the participated staffs workshops, seminars and departmental training where as 10%
received classroom training. Only 5% were given program instruction training
5.2.11The Quantitative analysis pointed out that majority of the respondents were
interested in providing housing loans to customers, 30%, and 20% sanctioned loans to large
industries and factories, 18% offered Vehicle loans, 15% offered business loans, 10% offered
personal loans, 4% staffs gave agricultural loans and 2% in educational loans. The least 1%
staffs provided marriage loans to Customers. Also, 40% of these staffs went for Customer
portfolio analysis while offering these credits.25% staffs did rating based analysis and 10%
staffs provided credits to customers by following guidelines issued by the Bank.
5.2.12 The analysis reveals that 40% staffs accepted land agreements, 30% staffs accepted
assets and 15% accepted jewellery, 10% staffs accepted Share and debentures and 5% staffs
collected other documents as security towards the credit offered.

28. 28
5.2.13 The default customers were informed within 1 to 4 months of default payment by
75% staffs, 20% staffs informed customers between 4 to 6 months period and 5% staffs
waited for 10 months to inform the default to its customers.
5.2.14 Is is observed from the analysis that 65% staffs stood in favour of bank’s risk
management strategy and mentioned it to be enhancing bank’s performance. 20% stated
that the bank’s risk management strategy needed improvement. It was also observed that
15% were against the opinion that bank’s risk management enhanced its performance.
The above results are the collective opinion of only 50 staffs of UBI and there are chances
for these results to be different from others and bank’s opinions.
5.3 Effective Risk management strategy of Union Bank of India
Every financial enterprise will be associated with risks and risk management. What counts
more is the efficiency of the financial institutions in dealing with the increasing risk exposure
to their business. Credit, Operational and Market risks remain to be the most adversely
affecting areas in risks management. According to reports, the UBI has an effective
management strategy to deal with the risks associated with it.
UBI has introduced the following steps to deal with
A.) Credit risks:
 Introduced Standardized Credit Approval Process.
 Maintains very good credit risk management practices by rating migration,
calculating probability of defaults of borrowers, credit distribution rating etc.
 Introduced comprehensive credit rating and scoring models being to evaluate retail
and non‐retail portfolio risks of the bank.
 The UBI has clearly stated its risk acceptance / avoidance levels, risk tolerance limits,
preferred levels of diversification and concentration, credit risk measurement, etc in
a precise manner.
B.) Operational risks
 Comprehensive Operational Risk Management Policy has been introduced to
enhance the level of sophistication in the future and to measure operational risks
both qualitatively and quantitatively
 Introduction of comprehensive system of internal controls, systems and procedures
to monitor and mitigate risk.
 The new products/ services are institutionalized to assess the risk inherent in it.
 Applies a very good Internal audit and Risk Based Internal Audit to control and
mitigate risk.

29. 29
C.) Market risks
 ALM system with 100% coverage of data on both assets and liabilities.
 Structural Liquidity, Interest Rate Sensitivity, Fortnightly Dynamic Statement etc
prepared regularly to measure the liquidity and interest rate risks.
 Asset Liability Management Policy and the Treasury Policy defined clearly.
 Formation of Mid Office for independent reporting on risk aspects.
5.4 Conclusion
According to Rejda and McNamara (2013), the risk management system assists the banks to
value the properties, claims, policies and other credit information. This is an effective
management system to track and manage the performance of the banking institution and
sector. It is observed that with the evolution and updating of integrated banking systems,
more customers will be approached by banks which will simultaneously help in the
improvement of nation’s economy there by contributing to major economic developments
around the world. Through this chapter the researcher has analysed the collected data to
form results and further studies are made by the researcher to improve the main risk
aspects related to the Union Bank of India.
Chapter 6
Conclusions and Recommendations
6.1 Introduction
In this study, the researcher has studied about Risk management and its relation with
organizational performance in the banking industry and the Union Bank of India is
considered for the research study. The quantitative and qualitative data analysis has helped
to understand the various pros and cons related to Risk management in the UBI. In this
chapter, the researcher will be making conclusions and recommendations on the basis of
the study conducted. The researcher will also be suggesting certain recommendations UBI
for further improvement in the area of its Risk Management.
6.2 Conclusion
The main objective of this study was to study about the increasing risk exposure in the
banking industry and to develop a theoretical and pragmatic solution for the same.

30. 30
Concentration on the main objective has led to the identification that credit risks are the
major reason behind the increasing losses and failures of various banks. But it was surprising
to find that despite the reverse economic conditions prevailing in the industry, the Union
Bank of India has managed successfully in its risk management process with a good rate of
credibility among both employees and public.
This study also examined Enterprise Risk management strategies as the effective strategy
used by the banking sector protect from risk mitigation. It was observed during the study
that Union Bank of India has a well‐maintained risk management structure with
comprehensive practices, internal control and policies to protect it from risk exposures.
6.3 Evaluation of Results
This research has been carried in two sections‐ Quantitative analysis and Qualitative
analysis. The qualitative analysis was conducted to get the opinion which will represent the
perspective of UBI’s higher management officials. The quantitative analysis was conducted
to get the perspectives of Risk management from the side of workers in UBI.
This research is not free from its drawbacks. Since the interview was conducted only with 2
Managers of UBI, the reviews from their side shall contradict from others and shall not be
inferred as representation from the side of UBI and other banks in general. The survey
conducted also has a limited size of sample and the views and opinions of staffs are based
on their personal perspectives and hence, there are chances for variations in percentage of
various results when conducted with a larger population.
6.4 Recommendations:
As part of the research, the researcher has received many results that will act in favour of
The UBI and its customers. Banking industry is always hand‐in‐hand with its customers and
shall not survive without customers. This has to be understood from the part of Union Bank
of India and necessary steps must be taken accordingly without affecting the banking
policies together with protection of customer needs and interests. The researcher intends
to make following recommendations to the bank based on the research conducted:
1. UBI must maintain flexibility and transparency in banking operations.
2. It is suggestible that the bank improves financial viability to the customers.
3. Maintaining and increasing the capital adequacy of the bank, time‐to‐time will aid its
functioning and proper risk management.
4. Implementation of strict rules and regulations regarding Credit allotment and
Recovery is a must for bank for its increased performance.

31. 31
5. Improved computerization, technology and operational development throughout
every branches of the Bank will help the bank to withstand competition and risk
exposures.
6. Tightening of prudential norms is mandatory for effective risk management.
7. Good Asset‐Liability management for decreasing risk exposure is also necessary for a
well maintained risk management.
8. It is recommended that UBI maintains and develops strong Human Resource
Management and internal controls.
9. Maintenance of adequate reserves to deal with unforeseen and unpredictable crisis
will aid the banking performance.
10. De‐regulation of interest rates and bringing down of Statutory Liquidity Ratio, Cash
ratio etc are also recommended by the researcher.
6.5 Future Work
This research on Risk management in banking industry has concentrated only on one bank‐
Union Bank of India and hence results obtained will be mainly dependent on the Indian
banking industry. Focus must be made to other banks in various zones/ nations in the world
for better understanding, comparison and improvement of the subject under study. This will
help in developing more ideas and strategies in the area of study. More research can be
conducted to areas of banking sector where risk assessment and related measures are least
known and analysed.
APPENDIX
Interview Questions to Managers
Q1. Has the recession changed the banking sector? If yes how?
Q2. What credit culture is followed by your bank?
Q3. Does the bank have any Risk assessment board to manage Risk management?
Q4. What risk management strategies are adopted by your bank?
Q5. What primary measures are adopted by your bank for managing risks?
Q6. Is there any quality check for the products of bank, before they get introduced to the
Public?
Q7. Does the bank utilize any risk mitigation systems to manage its risks?
Q8. What actions are followed by the bank to recover its losses?
Q9. What is your opinion on association of risk management with bank’s performance?

32. 32
Q10. Are there any suggestions to improve current risk management system?
Questionnaire for Bank Staffs
1. GENDER
Male Female
2. AGE
< 25 years 25‐50 years > 50 years
3. WORK EXPERIENCE WITH UBI
< 2 years 11‐20 years
2‐5 years > 20 years
6‐10 years
4. Which credit criteria do you consider to allow credits?
Reputation and Previous history of applicants
Experience and strength of business
Past earnings and strength of financial statements
Ability to repay loan
5. Which among the following training was provided to you by the bank?
Class room
Departmental
On‐job
Workshops and Seminars
Program Instructions
6. Which guideline do you follow while offering credits to public?
Customer portfolio analysis
Rating based analysis
Sensitivity analysis
Other guidelines
7. Mention the period at which customers are informed about their default payments?
Within 1‐4 months
Between 4‐6 months
> 10 months
8. Which of the below mentioned portfolio diversification improves your bank’s
performance?
Personal loans Vehicle loan
Agriculture loans Marriage loan
Business loans Housing loan
Educational loan Loans for larger industries and factories
9. Which security is considered by you for providing customer loans?
Jewellery Shares and Debentures

33. 33
Assets Others
Land
10. Do you find bank’s Risk Management system to be effective in improving bank
performance?
Yes Needs improvement
No