◆Risk is inherent in any walk of life in general

and in financial sectors in particular.

Till recently, due to regulated environment,

banks could not afford to take risks.

But of late, banks are exposed to same

competition and hence are compeled to

encounter various types of financial and

non-financial risks. Risks and uncertainties

form an integral part of banking which

by nature entails taking risks.

There are three main categories of

risks; Credit Risk, Market Risk &

Operational Risk. Author has discussed

in detail. Main features of these risks as

well as some other categories of risks

such as Regulatory Risk and

Environmental Risk. Various tools and

techniques to manage Credit Risk,

Market Risk and Operational Risk and its

various component, are also discussed in

detail. Another has also mentioned relevant

points of Basel’s New Capital

Accord’ and role of capital adequacy,

Risk Aggregation & Capital Allocation

and Risk Based Supervision (RBS), in

managing risks in banking sector.