Banking Industry - Part 6


Chapter 5. Conclusion

5.1 Introduction

The chapter provides concluding remarks related to the study of dynamic risk management in the banking sector developed in the underlying research. Upon developing conclusion from the research objective, the underlying chapter has also referred to the managerial implications and limitation of the study. Moreover, the chapter also shed light on the future research avenues.

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5.2 Summary and Findings of the Research

Underlying research has been of immense importance from the various perspectives. The conclusion that has been derived from the above study had been discussed below.

Achievement Of Objectives

The study is aimed at exploring various aspects in the risk management in the banking framework. The questionnaire based responses have highlighted important aspects in the entire mechanism. For risk and risk management, bankers asserted the extended concern in the domains of liquidity and operational risk. In line with objective that aimed at exploring factors that has major influence on the risk management in the banking sector the study has found bankers view related to extended role of operational conduct in managing the risk in banking dynamically. This increased concern in assessment is assumed to be the aftermath of economic downturn of 2007-08 that claimed central responsibility on the banking operations.

Attempt to explore the role of management and regulatory framework in the dynamic risk management in the banking industry, the study has identified the role of internal banking implementation framework is more influential than the role of the external committees. External committees like Basel Committee play central role in guiding the risk management in banking business. In similar fashion, the role of government in due course has been considered as less influential by the banker for the dynamic risk management in the banking industry.

In managing the risk, stakeholders have revealed that the role of technology for making certain that the set limits and controls for the risk management purpose are accurately followed is very important. Ease of IT based results reports related to risk exposures for the audit in specific has been assigned significant important by the bankers.

The importance of dynamic risk management has been crystal clear to the bankers as results revealed from the mixed results for risk management tool and 100 percent results for referred tools employment. Moreover, the participant bankers referred to increased responsibility on controlling authorities for ensuring due diligence following of set rules and guidelines set by the internal banking set as well as regulatory authorities.

The results have been in clear alignment to the core objective of dynamic risk management in the banking industry. Exploring how the dynamic risk management in banking industry has been found to rest centrally in the implementation of the set principle in due course. It is similar to the notion that the best strategy face failure in case of non-effective implementation while the secondary rated strategy can drive businesses to success if effectively and efficiently implemented.

Managerial Implications

All academic research studies are conducted to develop some insight that offers benefits on the practical grounds. Following the similar trend, the aim of the underlying study in addition to the objective determined is to provide valuable insight on grounds for the risk management in banking industry. The results of the underlying research also have following managerial implications:

  • Risk management in the banking industry can further be enhanced by focusing on the factors identified as important by the participants. For instance, participants in the underlying research have identified process of IT performance monitoring and subsequently the importance of the audit feasibility in contribution in the dynamic risk management. It has immense managerial implication as the increased attention is required to be given to the performance monitoring to risk assessment resulting from information technology tools. Moreover, since banks have faced the decline despite of strict IT protocols set in IT system before economic downturn. Therefore, it has been highlighted by the bankers that IT system must be able to monitor the performance as well as must facilitate the audit of the business transactions with more accuracy.
  • The concentration of the bankers' concern for the liquidity, exchange and operational risk also provide decision makers important guidelines for the mangers. More importantly the operational and liquidity risks are found to have the highest level of concentration. Referring to the fact that these factors had been highlighted as major contributors in the banking and economic downturn; hence, bankers currently still have high level of concerns for managing these factors. Hence, risk management techniques must account in greater detail the assessment of these factors.
  • Another important managerial implication extractable from the underlying research has been the role of government. More importantly the role of Basel Committee has been referred less important as compared to the other contributors. Alongside the role of top management and operational staff has been increasingly identified. Hence, it can extract the core of dynamic risk management lies in the implementation. Bankers consider the role accurate implementation of rules and procedures more important than developing new policies.

5.3 Limitations

The research is developed in the defined scope out of the entire system; hence, despite of making comprehensive attempt towards the topic, factors on ground pose certain limitation to it. In similar fashion the underlying research is also posed by the certain limitations. These limitations have been discussed below:

  • Risk management across the entire banking system has been shed light upon. This practice has significantly affected the ability of the research to address the mentioned areas in required detail. Hence posing the limitation to the study.
  • The dynamic risk management in the banking sector is regarded more as a matter of sophisticated techniques implementations. The study has accounted the role of these techniques in the bankers’ view point. Hence, deviation in the role of these factors or techniques in bankers' perception developed in the study and in reality have limitation posing impact on study.
  • The study results have only accounted the sample of 40 bankers in the study. Across thousands of banker working worldwide as well as in the country the small sample size also poses biasness and limitation to the study. Therefore, the results can undergo changes with greater sample size.

5.4 Further Research

The research of the dynamics risk management in the banking sector attempted to develop the bankers review on the risk management in the banking sector. Risk management in banking has always been an important avenue of debate and exploration by the bankers and financial academics. The underlying study based on the conclusion from the data assessed as well as limitation of the underlying research has opened up many avenues for future research. Following are the avenues of future research that have been further emphasized by the underlying study:

  • The future research can account for the perception of bankers on the cross country basis for identifying the working factors that bankers worldwide refer as important for the dynamics risk management in banks.
  • Risk management has always been an important area of assessment for the study in specific reference to banking. The current results from the study had identified a significant decline in perception of bankers related to bank's ability in dealing with risk. Hence, the future research must explore factors that in the bankers' opinion are of increased importance in order to ensure risk in banks has been managed.
  • Each of the domains of risks such as types of risks, the role of functional department as well as each level employees in the mentioned functional departments are of immense importance. Hence, exploring each of the domains for respective contribution in the risk management in banking also provides referral for the future research.
  • The impact of world economic crisis that originated from the sub-prime mortgage loans in US as well as complexly engineered products that failed to sustain the banking have profound impact on the overall confidence of customers as well as bankers. Hence, an important area of psychological revival of the confidence in banks and banking procedures also extend important areas of research.
  • The relationship based assessment developed from regression analysis also forms vital area of study such as relationship of sophisticated IT based system on the risk management in the banking.

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5.5 Summary

The chapter has highlighted the concluding points drawn from the study and its respective alignment with the objective set for the study. The wrapping up of the study entitled the dynamic risk management in the banking industry has been provided by the limitations assessment as well as the future areas of study in order to further explore the domain.

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