The quantitative measurements some of the risks in banks is ok to some extent where the Regulation and supervision are meticulously adhered to and banks are allowed to run on professioal lines without any interference from the Government. and the accounts are not allowed to be manipulated in any way. The over all business risks are not based on any mathematical models and the element of human risk at least in Indian Context has not been brought under any assessment.The business risks thanks to interference of the Government on day to day running of banks, deployment of credit to preferred segments and chosen projects and financial support to the Government through statutory Liquidity requirements etc gets distorted to a great extent and are not measurable by best of mathematical formula. Similarly the human risks in running the business are not subjected to any assessment and both the business Risks and human Risks qualitatively affect the business models and are not easily measurable in the absence of any serious thought as in the case of other risks. Since banks deal in money and with human resources and both are very sensitive to handle. the risks measurement approach presently in vogue cannot be a foolproof method to prevent financial weaknesses and failures.
Dr T V Gopalakrishnan
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