Industry Oriented Dissertation Project On

TO STUDY RISK MANAGEMENT PROTOCOL IN INDIAN

FINANCIAL MARKETS
submitted for the partial fulfillment of the requirement of the degree of

POST GRADUATE DIPLOMA IN MANAGEMENT (PGDM)

Approved by
All India Council of Technical Education (AICTE)
Submitted by
Ashutosh Santosh Singh
Roll No.: 78
Specialization: Finance
Submitted To

PROF. Prachi Mangaonker

SASMIRA’S BUSINESS SCHOOL (SBS)

SARSMIRA MARG, WORLI, MUMBAI.

January , 2024

1
 DECLARATION BY THE CANDIDATE

I Ashutosh Santosh Singh hereby certify that the work which is being presented in this Industry Oriented
Dissertation Project Report entitled- “ TO STUDY RISK MANAGEMENT PROTCOL IN INDIAN
FINANCIAL MARKETS” in partial fulfillment of the requirement for the award of the Degree of Post Graduate
Diploma In Management and submitted to Sasmira’s Business School, Sasmira Marg, Worli, Mumbai, is an
authentic record of my own work carried out during a period from November, 2023 till January, 2024 under the
guidance of Prof. Prachi Mangaonker

The matter presented in this project report has not been submitted by me for the award of any other degree of this
or any other Institute.

Wherever references have been made to intellectual properties of any individual / Institution / Government /
Private / Public Bodies / Universities, research paper, text books, reference books, research monographs, archives
of newspapers, corporate, individuals, business / Government and any other source of intellectual properties viz.,
speeches, quotations, conference proceedings, extracts from the website, working paper, seminal work et al, they
have been clearly indicated, duly acknowledged and included in the Bibliography.

Name of the Student: Ashutosh Santosh Singh

Signature of the Student:

This is to certify that the above statement made by the candidate is correct to the best of our knowledge.

Signature of Faculty Supervisor/Guide:

Name of Faculty Supervisor/Guide: Prof.Prachi Mangaonker

2
 CERTIFICATE

This is to certify that Mr. Ashutosh Santosh Singh is a bonafide student of Sasmira’s Business School, two
year full-time Post Graduate Diploma in Management (PGDM), (Finance), Roll No. 78 and as a part of the All
India Council of Technology (AICTE) guidelines, the student has carried out the Industry Oriented Dissertation
Project Investors' Sentiments Post Merger: TO STUDY RISK MANAGEMENT PROTOCOL IN INDIAN
FINANCIAL MARKETS during the period from November 2023 to January 2024 under my guidance in partial
fulfillment of requirement for the completion PGDM as prescribed by the All India Council of Technical
Education (AICTE).

This Industry Oriented Dissertation Project Report is the record of authentic work carried out by him / her
during the period from November 2023 to January 2024.

Place:

Date:

Signature of the Signature of the Signature of the

Supervisor/Guide: Project Coordinator: Dean:

Name of the Name of the Name of the

Supervisor/Guide: Project Coordinator: Dean:
Prof.Prachi Mangaonker Dr. Sanskruti Kadam

3
 ACKNOWLEDGEMENT

I’ve learned a lot from working on this project. I’d want to take this chance to express my
gratitude to Prof.Prachi Mangaonker, my internal project manager, whose invaluable
advice and suggestions made this project feasible. He has been a huge help, and I
appreciate her so much. He has inspired me and used my zeal to good purpose.

I would like to thank my parents, my siblings, and all of my friends for their willing
assistance and unwavering devotion during the course of my project work.

I would also want to show my sincere gratitude towards Dr. Sanskruti Kadam, Dean of
Sasmira’s Business School, for allowing me to participate in the project and so enhance
my knowledge and expertise.

I want to express my appreciation to the faculty and personnel of Sasmira Institute,

especially the library staff, who were very helpful in getting me the books and articles I
needed for my project.

Last but not least, I want to express my gratitude to everyone who helped me in any way,
whether directly or indirectly.

Place:

Date:

4
 EXECUTIVE SUMMARY

The Indian financial market, amid rapid technological integration, is undergoing a transformative phase
that necessitates a comprehensive examination of risk management practices. This report delves into the
multifaceted landscape shaped by fintech, artificial intelligence (AI), and blockchain, with a focus on
their impact on cybersecurity, real-time risk monitoring, algorithmic trading, and the integration of
environmental, social, and governance (ESG) factors.
The surge in digital transactions has intensified the importance of robust cybersecurity. Regulatory
bodies are responding proactively, reinforcing guidelines and mandating advanced infrastructure
investments. Real-time risk monitoring, facilitated by sophisticated algorithms, has become imperative,
enhancing agility and responsiveness to emerging threats. The rise of algorithmic trading brings forth
regulatory frameworks emphasizing robustness and transparency.
ESG considerations, integral to contemporary risk management, respond to global trends and investor
awareness. Financial institutions are adapting strategies to acknowledge the interconnectedness between
financial performance and broader societal and environmental concerns.
A survey, encompassing both the general public and investors, serves as a critical component. The
findings will guide the direction of the report, ensuring it addresses the concerns, perceptions, and
expectations of diverse stakeholders in the evolving financial landscape.
As we navigate the dynamic interplay of technology and risk management, the commitment to adapt and
improve practices remains paramount

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6
CONTENTS

Chapter Details Page

No. No.

Title Page 1

Candidate’s Declaration 2

Certificate by the Company 3

Acknowledgement 4

Abstract / Executive Summary 5

1 INTRODUCTION 1-23

1.1 Background 6

1.2 Need and Significance of the Study 12

1.3 Scope for the Study 16

1.4 Aims and Objectives of Study 18-21

1.5 Research Questions 22

1.6 Research Hypothesis 23

2 LITERATURE REVIEW 24-33

2.1 Introduction 24
 2.2 Review of Opportunities and Challenges in the Industry 27

2.3 Literature review related to your topic 28

3 RESEARCH METHODOLOGY 34-37

3.1 Problem Identification 34

3.2 Methodology Adopted 35

3.3 Data Collection 36

3.4 Data Analysis 37

4 DATA DESCRIPTION AND ANALYSIS 38-50

4.1 Data Analysis 38-50

5 SUMMARY AND CONCLUSION 51-66

5.1 Findings and Conclusions 51

5.2 Recommendations from the study 53

5.3 Learning Outcomes 54

5.4 Strength and Limitations of Study 55

5.5 Future Scope of Research 56

BIBLIOGRAPHY AND REFERENCES 57-58

ANNEXURE I- Questionnaire if any 59-61

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 CHAPTER 1

1.1 INTRODUCTION

INDIAN FINANCIAL SYSTEM AND RISK MANAGEMENT

The evolution of India’s economy depends on the performance of financial
system. As per New Dictionary of Webster the meaning of finance is “the managing or
the science of managing money matters”. Thus the system of finance contains different
order of institutions through which the additional finance is mobilized from those entities
that generate added revenues and shifting those revenues when someone needed.

For the economy’s growth of a country, the good system of finance amounts to
different valued functions. They are:

a) Collection and Distribution of Savings.

b) Payment and Settlement function.

c) Credit control.

d) Maintaining liquidity.

e) Execution of agencies concerned to service.

The top five developments in Indian Financial System
1) Roll back the legitimate status.

2) Setting up of the monetary morality board.

3) Passage by goods and also services tax bill.

4) Passage of the insolvency and bankruptcy code.

5) Thrust towards digitization of government payments.

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 RISK

Risk means the uncertainty in the probability distribution of returns. It is inherent in

the entire activities perform in our day to day life, and all of us remain concerned
about it. Usually the risk is connected to more volatile activities. However, the
higher risk is taken, the higher profit that can be usually expected. This rule applies
to an investment.
. It makes investment process engrossing. There are numerous ways to
decrease risk and get utmost return. Investment portfolio and hedging strategies
are so popular among the risk reduction strategies. In other words, if the
probable return of future varies from required return is risk. However, such a
guarantee is not possible in the real world; hence, the need for risk management
arises. However, complete elimination of risk is impossible, but certain steps can
be taken to mitigate risk to a considerable extent.

RISK MANAGEMENT

Economic Times -In financial world, risk management is the practice of exercise to
identify all possible risk in proceeds, inspect them and take all preventive steps
to decrease the risk.6
To determine financial dynamics of the corporate investors, risk
management plays a critical role. However, it grips identical magnitude when
individual investment and their investment objectives are conceived. Asset
management is important for the individual investors for this goal.

Figure: 1.4 Risk Management

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 • Financial markets are those network enabling participators to bargain in
financial claims. Money market and Capital market are the combined
financial markets in India. In, Money market, the securities related to short
term is traded while Capital market is for trading of long term securities.
Primary market directly deals in new issue market, and the secondary market
is indirectly trading in existing or old securities.
• The third most prerequisite element of financial instruments or assets.
Financial instruments aid the intermediaries and markets to perform the vital
preface of channelizing funds from lenders and borrowers and vice versa.
These instruments are either primary securities or secondary securities.
• The competence of developing financial system is totally depending on
diversity of financial services which are directly or indirectly provided by
financial intermediaries. Financial services comprise merchant banking,
leasing, hire purchase, credit rating etc.

COMPONENTS OF INDIAN FINANCIAL SYSTEM

Financial Financial Financial

Financial Markets
Institutions Instruments Services

Banking Non Banking Money Capital Term Type Fund Based Fee Based
Institutions Institution Mkt. Mkt.

- Short term - leasing

Commercial Cooperative - Call money market - Medium terms - Hire
Banks Banks - Treasury bills - Long term
- Commercial Bills
Purchase

Public Sector - Primary Securities - Merchant Banking

Private sector - Primary Market - Secondary securities - Credit Rating
R.R.Bs - Secondary market - Innovative Instruments - Mergers
Organised Unorganised
Foreign Banks - Derivative market
Financial Financial
Institutions Institutions

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 DEFINITION OF FINANCIAL MARKET

The Oxford dictionary of Economic terms Financial Market as “the markets

in which financial assets are traded. These include stock exchange for trading company
shares and government debt, the money market for short term loans, the foreign exchange
market for trading currencies, and number of specialized markets trading financial
derivatives.”

Business Jargons defines Financial Market as “the markets refers to a marketplace,

where creation and trading of financial assets, such as shares, debentures, bonds, derivatives,
currencies etc. take place.”

FINANCIAL FUNCTIONS OF MARKET

▪ Loans: Allow transference of funds to other funds for penetration or

consumption.
▪ Risk Sharing: Allow transference of risk from those individuals which initiate
input to those individuals which endow funds for their penetration.
▪ Liquidity: Confers the bearers of assets which are financial in nature with an
occasion to resale.
▪ Efficiency: Financial market alleviates dealing and knowledge cost
simultaneously.

FACTORS AFFECTING FINANCIAL MARKET

1. Action of Investors: - The investor’s action will immediately strike the values of
stocks, bonds, and futures in the securities market.

2. Business Conditions: - The market is highly affected by business conditions. The

profits and sales depend on conditions which are present in business concern.
3. International event: - Numerous events in all the sides of the world like any
alter in prices of currency fight between two countries, and changes in government
will impact the value of securities, which finally affect investment fund.

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 TYPES OF FINANCIAL MARKET

The financial markets have two major components; the capital market and the money
market.

• CAPITAL MARKET: The Capital market is a market which has a prolonged

matureness.3 It is broader than the market of securities and clasp entire shape of
lending and borrowing. It consist all complex networks through which medium
and prolonged term funds are combined and accessible to business, government and
individuals.

• MONEY MARKET : To meet the liquidity needs of lenders and borrowers, money
market is the place where the short term funds exchange. Various sub markets include
in this market like Call Market, Bill Market etc.

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 1.1 Background

Before 1991, India's financial market was a tightly controlled ecosystem with limited participation
and risk awareness. Think state-run banks, directed credit allocation, and basic financial instruments.
As liberalization swept in, new risks emerged alongside a surge in complexity. Derivatives, foreign
investments, and increased competition demanded a shift in approach. Regulatory bodies like SEBI
stepped in, laying the groundwork for risk management practices like credit assessment and internal
controls.

The post-2000 era saw continued growth and globalization. Market volatility, interconnectedness,
and stricter global regulations like Basel Accords became the new normal. Sophisticated techniques
like Value at Risk models and stress testing found their way into the toolbox. SEBI issued risk
management guidelines tailored to different market segments, while RBI strengthened its
supervisory framework. The 2008 crisis further underlined the importance of robust risk
management.

Today, the Indian financial market stands transformed. From its controlled past, it has evolved into
a dynamic, internationally integrated system. While challenges remain, the journey highlights the
growing commitment to robust risk management – crucial for market stability and investor
protection. This journey, however, is far from over, with continuous adaptation and improvement
key to navigating the ever-evolving financial landscape.

Imagine the Indian financial market pre-1991. State-controlled institutions held the reins, with
limited financial instruments and a focus on directed credit allocation. Risk management wasn't
exactly at the forefront, given the controlled environment. But then, 1991 arrived, ushering in an era
of economic reforms. Deregulation, foreign investment, and a diverse range of new instruments like
derivatives and mutual funds painted a new picture. The market was opening up, competition was
heating up, and the need for managing new and complex risks became undeniable.

This marked the genesis of risk management awareness in India. Regulatory bodies like SEBI
emerged, paving the way for practices like credit risk assessment and internal controls within
institutions. However, the journey didn't end there. Post-2000, the market continued to grow and
globalize, bringing its own set of challenges. Increased market volatility, interconnectedness with
global markets, and stricter regulations like Basel Accords demanded more sophisticated risk

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 management tools. Value at Risk models and stress testing became the new buzzwords, while SEBI
issued tailored risk management guidelines for various market segments. The Reserve Bank of India
(RBI) also strengthened its supervisory framework for banks and financial institutions. The 2008
global financial crisis served as a stark reminder of the crucial role robust risk management plays in
ensuring market stability and investor protection.

Fast forward to today, and the Indian financial market is a far cry from its controlled past. It's
dynamic, internationally integrated, and constantly evolving. While challenges like cyber threats
and operational risks remain, the commitment to robust risk management is evident. Regulatory
frameworks continue to adapt, incorporating best practices and lessons learned from global events.
Institutions are embracing advanced risk management techniques, leveraging technology and data
analytics to gain deeper insights.

In the contemporary Indian financial market, the rapid integration of technology has ushered in a
transformative era for risk management. The advent of fintech solutions, artificial intelligence (AI),
and blockchain technology has fundamentally altered the landscape, offering unprecedented
opportunities for efficiency gains while introducing new complexities and challenges.

One of the prominent areas where technology has made a substantial impact is in the realm of
cybersecurity. As financial transactions increasingly migrate to digital platforms, the vulnerability
to cyber threats has become a paramount concern. Regulatory bodies have responded proactively by
reinforcing guidelines on data protection and mandating robust cybersecurity measures. Institutions
are now required to invest significantly in advanced cybersecurity infrastructure to mitigate the risks
associated with potential breaches, ensuring the confidentiality and integrity of sensitive financial
information.

The rise of digital transactions and online trading has accentuated the importance of real-time risk
monitoring. Traditional risk management models are being augmented, if not replaced, by
sophisticated algorithms that can swiftly analyze vast datasets to identify potential risks. This shift
towards real-time monitoring not only enhances the agility of risk management but also enables
financial institutions to respond promptly to emerging threats, thereby minimizing the impact on
market stability.

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 Regulatory responses to the evolving technological landscape include frameworks specifically
designed to address the risks associated with algorithmic trading. As algorithmic trading becomes
more prevalent, regulators are keen on ensuring that the algorithms employed by market participants
are robust, transparent, and do not pose systemic risks. These frameworks aim to strike a delicate
balance between fostering innovation and safeguarding market integrity, reflecting the need for a
nuanced approach in the era of rapid technological advancements.

Moreover, the digital revolution has prompted a reevaluation of environmental, social, and
governance (ESG) considerations within risk management practices. With an increasing focus on
sustainability and corporate responsibility, financial institutions are integrating ESG factors into
their risk assessment strategies. This not only aligns with global trends but also responds to the
growing awareness among investors and stakeholders about the broader impact of financial activities
on society and the environment. As ESG considerations become integral to risk management,
institutions are compelled to adopt a more holistic approach, acknowledging the interconnectedness
between financial performance and broader societal and environmental concerns.

In this dynamic landscape, the need for continuous adaptation and improvement in risk management
practices is more pronounced than ever. The pace of technological change requires financial
institutions to stay ahead of potential risks, embracing innovative solutions while remaining vigilant
to emerging threats. The collaborative efforts of regulatory bodies, industry stakeholders, and
technology experts are crucial in establishing a resilient and secure financial ecosystem that can
navigate the intricacies of the digital age.

In conclusion, the integration of technology has propelled the Indian financial market into a new era,
demanding a reimagining of traditional risk management approaches. As the sector grapples with
the opportunities and challenges presented by fintech, AI, and blockchain, the commitment to robust
risk management remains paramount. Regulatory frameworks continue to evolve to address the
intricacies of the digital landscape, ensuring the integrity and stability of the financial market while
fostering innovation and sustainable practices. The journey of risk management in India is far from
over, with each technological advancement bringing forth new possibilities and complexities that
demand a proactive and adaptive response.

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 The Impact of Technological Advancements on Cybersecurity in the Indian Financial Market

• Explore in-depth how the integration of fintech, artificial intelligence, and blockchain
has influenced cybersecurity practices.
• Discuss the specific challenges posed by digital transactions and online trading and
how regulatory bodies are responding to these challenges.
• Examine case studies or examples of cybersecurity incidents in the Indian financial
market to illustrate the real-world implications.

Real-Time Risk Monitoring and Algorithmic Trading in the Digital Era

• Investigate how real-time risk monitoring has become imperative in the face of
increased digital transactions.
• Explore the role of algorithms in risk management and the regulatory frameworks in
place to ensure the reliability and transparency of these algorithms.
• Discuss the benefits and potential risks associated with algorithmic trading and how
financial institutions are adapting their strategies to this new paradigm.

ESG Integration in Risk Management: Navigating the Sustainability Landscape

• Examine the growing importance of environmental, social, and governance (ESG)

considerations in risk management practices.
• Explore how financial institutions are incorporating ESG factors into their risk
assessment strategies and the impact on decision-making processes.
• Discuss global trends in sustainable finance and highlight specific initiatives or
practices within the Indian financial market.

Influence of Fintech, AI, and Blockchain on Cybersecurity

:
Technological innovations such as fintech solutions have streamlined financial
processes, enhancing customer experience and operational efficiency. However, the
increased reliance on digital platforms and data storage poses cybersecurity risks. AI, on the
other hand, has empowered financial institutions with predictive analytics and automation,
but its misuse could lead to sophisticated cyber threats. The implementation of blockchain
technology has strengthened data integrity and transparency.

9
 Regulatory Responses and Cybersecurity Measures:

Regulatory bodies in India have responded to the evolving cyber threats by

reinforcing guidelines on data protection and cybersecurity measures. Compliance
requirements demand financial institutions to invest significantly in advanced cybersecurity
infrastructure. Case studies of institutions implementing robust cybersecurity measures and
adherence to regulatory frameworks illustrate effective risk management practices.

The Indian financial market has witnessed remarkable growth and dynamism in recent years, fueled
by factors like increasing digitization, integration with global markets, and the emergence of
innovative financial instruments. This progress, however, is accompanied by an ever-evolving risk
landscape, demanding robust and multifaceted risk management practices.

Shifting Risk Paradigms:

Traditionally, Indian financial institutions focused primarily on credit risk management. However,
the market's growing complexity has ushered in new and potentially more multifaceted risks. These
include:

• Cybersecurity threats: As financial transactions increasingly migrate online, concerns about

cyberattacks, data breaches, and operational disruptions escalate.
• Technological challenges: Fintech advancements, artificial intelligence, and blockchain
integration introduce both opportunities and risks, requiring careful assessment and
mitigation strategies.
• Algorithmic trading risks: The reliance on algorithms for risk management and trading
decisions necessitates strong governance and transparency frameworks to ensure fairness
and mitigate potential manipulation.
• Environmental, social, and governance (ESG) factors: Investors and regulators are
increasingly recognizing the potential financial implications of environmental
degradation, social inequities, and poor corporate governance, necessitating their integration
into risk assessment models.

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 Regulatory Responses:

Recognizing these evolving risks, regulatory bodies like the Reserve Bank of India (RBI) and the
Securities and Exchange Board of India (SEBI) have implemented various measures to strengthen
risk management practices in the market. These include:

• Enhanced cybersecurity guidelines: Mandating stricter data protection

protocols, cybersecurity audits, and incident reporting requirements for financial
institutions.
• Regulations for fintech and technology-driven innovations: Establishing frameworks for
responsible adoption of new technologies with robust risk management safeguards.
• Focus on algorithmic transparency: Emphasizing the need for explainable algorithms and
fair trading practices in algorithmic trading activities.
• Integration of ESG considerations: Encouraging financial institutions to consider ESG
factors in their risk assessments and investment decisions.

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 1.2Need and significance of the study

The Indian financial market has witnessed remarkable growth and dynamism in recent years, fueled by
factors like increasing digitization, integration with global markets, and the emergence of innovative
financial instruments. However, this progress comes hand-in-hand with an evolving and complex risk
landscape. This study aims to delve into the critical need and significance of exploring the impact of two
key factors – technology and sustainability – on risk management practices within this dynamic market.

Need for the Study:

1. Evolving Risk Landscape:

• Traditional risk areas like credit risk, market risk, and operational risk are still crucial, but they
are no longer the only ones.
• The rise of fintech, artificial intelligence (AI), and blockchain introduces new and potentially
more multifaceted risks, including cyber threats, algorithmic trading risks, and data privacy
concerns.
• Growing environmental and social concerns are prompting the integration of Environmental,
Social, and Governance (ESG) factors into risk assessment models, further complicating the
landscape.

2. Inadequate Understanding of the Impact:

• While the financial sector acknowledges the changing risk landscape, there is a lack of
comprehensive understanding of how technology and sustainability specifically impact risk
management practices.
• Existing research often focuses on individual aspects like cybersecurity or ESG integration in
isolation, neglecting the interconnectedness of these factors and their combined effect on risk
management strategies.
• Limited data and analytical frameworks exist to quantify and assess the evolving risk landscape in
the Indian context.

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 3. Regulatory Uncertainty and Knowledge Gaps:

• Regulatory bodies are actively developing frameworks to address emerging risks, but the pace of
technological change often outstrips regulatory adaptation.
• Financial institutions face uncertainty regarding compliance requirements and best practices for
managing technology-driven and sustainability-related risks.
• Knowledge gaps exist within the financial sector regarding effective risk management strategies
for the new risk landscape.

Significance of the Study:

1. Enhance Risk Management Practices:

• This study can contribute to the development of a comprehensive understanding of how

technology and sustainability impact risk management in the Indian financial market.
• By identifying and analyzing emerging risks, the study can help financial institutions develop
more effective and holistic risk management strategies.
• The findings can inform the design of regulatory frameworks that are better equipped to address
the evolving risk landscape.

2. Promote Financial Stability and Growth:

• Effective risk management is crucial for ensuring the stability and growth of the Indian financial
market.
• This study can contribute to a more stable and resilient financial system by providing valuable
insights into managing emerging risks.
• By promoting better risk management practices, the study can indirectly contribute to increased
investor confidence and economic growth.

3. Inform Sustainable Finance Practices:

• Integrating ESG factors into risk management is becoming increasingly important for investors
and regulators.

13
 • This study can provide valuable insights into the challenges and opportunities associated with
ESG integration in the Indian financial market.
• The findings can contribute to the development of best practices for incorporating ESG
considerations into risk assessment and decision-making processes.

4. Knowledge Sharing and Capacity Building:

• This study can serve as a valuable resource for financial institutions, regulators, investors, and
other stakeholders interested in understanding and managing emerging risks in the Indian
financial market.
• The findings can be disseminated through reports, workshops, and conferences to promote
knowledge sharing and capacity building within the sector.
• By contributing to a better-informed financial community, the study can ultimately benefit the
entire Indian economy.

Research Questions and Scope:

This study will address the following key questions:

• How has the integration of technology (e.g., fintech, AI, blockchain) impacted risk management
practices in the Indian financial market?
• What are the specific challenges and opportunities associated with managing technology-driven
risks in the Indian context?
• How are financial institutions incorporating ESG factors into their risk assessment models, and
what are the key challenges and opportunities?
• What role are regulatory bodies playing in addressing emerging risks associated with technology
and sustainability in the Indian financial market?
• What are the best practices for financial institutions to effectively manage technology-driven and
sustainability-related risks?

14
 The scope of the study will encompass:

• A comprehensive review of existing literature and research on risk management, technology, and
sustainability in the financial sector.
• An analysis of relevant regulatory frameworks and guidelines in the Indian context.
• Interviews and surveys with key stakeholders in the Indian financial market, including financial
institutions, regulators, and industry experts.
• Case studies of specific financial institutions that have successfully implemented innovative risk
management practices.
• Quantitative analysis of available data on risk incidents, regulatory actions, and financial
performance indicators.

Expected Outcomes:

This study is expected to deliver the following outcomes:

• A comprehensive understanding of the impact of technology and sustainability on risk
management practices in the Indian financial market.
• Identification of key emerging risks and challenges associated

15
 1.3 Scope for the study

1. Nature of the Study:

• Exploratory:
• The study adopts an exploratory approach to unravel the multifaceted dimensions
of investors' sentiments. It aims to uncover the underlying factors, sentiments, and
rationales that shape investors' views within the Indian financial market.
• Descriptive:
• A comprehensive description of sentiments held by diverse investor types will be
presented. The study seeks to delineate how different categories of investors,
including institutional investors, retail investors, and analysts, perceive and react to
various market dynamics.
• Analytical:
• The study will employ analytical methods to investigate relationships between
different factors and investors' sentiments. This includes an examination of
correlations between market indicators, such as stock price movements and trading
volumes, and the sentiments expressed by investors.

2. Scope of the Study:

• Investor Profiles:
• The study encompasses a broad range of investors, including institutional investors
(mutual funds, pension funds, etc.), individual retail investors, analysts, and
potentially stakeholders from related industries. This diverse inclusion aims to
capture varied perspectives within the investment community.

• Sentiment Metrics:
• The scope includes the evaluation of both quantitative metrics (stock price
movements, trading volumes, changes in market capitalization) and qualitative
metrics (sentiment analysis from news articles, social media, and financial
reports). This dual approach aims to provide a comprehensive understanding of the
sentiment landscape.

16
 • Factors Influencing Sentiments:
• The study will delve into the factors that influence investors' sentiments. This
encompasses financial metrics like revenue projections and debt ratios, as well as
qualitative factors such as strategic rationale, management communication, and
industry trends.
• Investor Behavior:
• Exploration of how investors react to market dynamics, including whether they
increase, decrease, or hold their positions. This analysis seeks to understand the
degree of confidence or skepticism prevailing among investors.
• Market Reaction:
• Analysis of how market indicators are affected by various events. This involves
examining how different factors contribute to stock price movements, trading
volumes, and other market reactions.
• Long-Term Implications:
• The study will assess whether investors' sentiments align with the long-term
performance of entities within the Indian financial market. This involves tracking
financial indicators over an extended period to understand the enduring impact of
sentiments.
• Comparative Analysis:
• Potential extension of the scope to compare sentiments and market reactions
within the Indian financial market. This might involve identifying patterns and
trends by comparing data with similar industries or sectors.
• Geographical Scope:
• Consideration of potential geographical variations in investors' sentiments.
Acknowledging that perceptions may differ across different markets, the study
aims to capture diverse regional perspectives.
• Communication Effectiveness:
• Evaluation of how effectively management communicates information to
investors. The study seeks to understand how communication strategies influence
investors' sentiments.
• Regulatory and Legal Aspects:
• If relevant, the study might consider how regulatory frameworks, legal
developments, and government policies shape investors' sentiments within the
Indian financial market..

17
 1.4Aims and Objectives of Study

• Knowledge and Confidence:

o Determine the general public's level of knowledge regarding financial terms and concepts.
o Assess their confidence in making informed financial decisions.
o Evaluate their understanding of potential risks associated with financial activities.
• Risk Perception and Concern:
o Gauge the public's awareness of emerging risks like cybersecurity threats and
technological disruptions.
o Measure their level of concern about data breaches and the safety of their financial
information.
o Assess their perception of the adequacy of risk management practices in the Indian
financial market.
• Information and Resources:
o Identify the primary sources of information the public uses for financial decision-making.
o Evaluate the perceived helpfulness of available information about risk management.
o Assess the need for additional resources or educational initiatives on financial risks.
• Behavioral Impact:
o Explore how risk awareness and understanding influence the public's financial behavior
(e.g., saving, investing).
o Identify potential gaps in knowledge or perception that might lead to risky financial
decisions.
o Analyze the potential impact of increased information and education on risk management
practices.

18
 • To assess the attitudes, opinions, and preferences of investors towards investing in public sector
banks in the Indian market.

1. Investor Sentiment:
• Evaluate the overall sentiment of investors (both institutional and retail) towards investing in
public sector banks.
o Identify the predominant attitudes and perceptions held by investors (e.g., optimism,
skepticism, neutrality).
o Explore the factors influencing these sentiments (e.g., perceived stability, government
support, profitability, growth potential).
o Analyze any variations in sentiment among different investor segments (e.g., individual
vs. institutional, risk-averse vs. aggressive).

2. Motivations and Concerns:

• Understand the primary motivations that attract investors to public sector banks.
o Identify the perceived benefits and advantages of investing in these banks (e.g., stability,
lower risk, social responsibility).
o Explore the specific investment goals and preferences driving investor choices.
• Analyze the key concerns that deter investors from public sector banks.
o Identify the perceived limitations and disadvantages associated with these banks (e.g.,
lower returns, bureaucratic inefficiency, slower growth).
o Understand the risk factors and challenges that investors perceive.

3. Preferences and Expectations:

• Explore the investment preferences of investors towards public sector banks.
o Analyze the types of financial instruments and products preferred by investors (e.g.,
stocks, bonds, mutual funds).
o Identify the desired investment timelines and expected returns held by investors.
• Understand the expectations of investors regarding public sector banks.
o Analyze their expectations for performance, growth, and future outlook of these banks.
o Explore their expectations for corporate governance, transparency, and social
responsibility practices.

19
 4. Potential Impact:
• Assess the potential impact of investor attitudes, opinions, and preferences on the performance
and sustainability of public sector banks.
o Analyze how investor sentiment might influence the flow of capital and liquidity into
these banks.
o Explore how investor preferences might shape the strategic decisions and product
offerings of public sector banks.

5. Policy Implications:
• Identify potential policy implications based on the research findings.
o Suggest measures to enhance investor confidence and attract greater investment into
public sector banks.
o Recommend best practices for public sector banks to address investor concerns and meet
their expectations.

20
 1.4 ii Objectives of Study

1. Evaluate the Impact on Risk Perception:

• Assess the perception of risk among investors and financial institutions in the Indian
financial market in light of technological advancements and sustainability considerations.
2. Examine Regulatory Responses:
• Analyze the effectiveness of regulatory responses in addressing emerging risks related to
technology and sustainability, and assess how regulatory frameworks have evolved to
safeguard the financial market.
3. Explore Investor Confidence:
• Investigate how risk management practices impact investor confidence, and assess whether
a well-managed approach to technology and sustainability risks contributes to a more stable
and resilient financial market.
4. Understand Knowledge Gaps:
• Explore existing knowledge gaps within the financial sector concerning effective risk
management strategies for the evolving risk landscape, and provide insights to fill these
gaps.
5. Inform Policy and Practice:
• Provide valuable insights that can inform policy decisions and industry practices related to
risk management, technology integration, and sustainable finance in the Indian financial
market.
6. Enhance Industry Preparedness:
• Contribute to the enhancement of industry preparedness by identifying emerging risks,
challenges, and opportunities associated with technological advancements and sustainability
considerations.

21
 1.5 Research Questions

1)

2) Age

3) Occuapation
4) Income Level
5) How familiar are you with the term "risk management" in the financial context?
Not familiar at all
6) In your opinion, how important is effective risk management for the stability and growth of the
Indian financial market?
7) Which of the following risk areas do you consider most significant in the Indian market today?
8) How concerned are you about the potential rise of cybersecurity threats in the Indian financial
market due to factors like fintech, AI, and blockchain?
9) Do you think regulatory bodies are adequately addressing the evolving cybersecurity
challenges in the financial sector? (Yes/No)
10) Where do you primarily seek information for making financial decisions?
11) How important is it for financial institutions to incorporate sustainability considerations into
their risk management practices?

12) What factors are most crucial for you when considering an investment?

13) To what extent does your awareness of risks influence your financial behavior (e.g., saving,
investing)?

22
 1.6 Research Hypothesis
The integration of technology, including fintech, artificial intelligence, and blockchain, into the
Indian financial market has a significant impact on risk management practices, investor
sentiments, and the overall stability of the financial ecosystem. As advancements continue, there
is an expectation that these technological changes will reshape traditional risk paradigms, present
new opportunities, and introduce challenges that demand adaptive strategies from financial
institutions and regulatory bodies."

23
 CHAPTER 2
LITERATURE REVIEW

2.1 Introduction

In an era marked by rapid technological advancements and a heightened awareness of sustainability

considerations, the financial market is undergoing a profound transformation in its risk management
practices. The integration of technologies such as fintech, artificial intelligence (AI), and blockchain has
ushered in a new paradigm, presenting both unprecedented opportunities and complex challenges.
Simultaneously, the recognition of environmental, social, and governance (ESG) factors is reshaping risk
assessment strategies, emphasizing the interconnectedness between financial activities and broader
societal and environmental concerns.

This literature review aims to provide a comprehensive understanding of how these dual forces—
technology and sustainability—impact risk management practices within the financial market. By tracing
the historical evolution of risk management, examining theoretical frameworks, and scrutinizing
empirical studies, this review seeks to elucidate the multifaceted landscape in which financial institutions
navigate risks in the contemporary digital age.

24
 The first section of the review explores the historical trajectory of risk management in finance, shedding
light on traditional approaches and their evolution. Subsequently, an overview of theoretical frameworks
provides a theoretical foundation for understanding the subsequent discussions on the role of technology
and sustainability in risk management. The influence of technology, encompassing fintech solutions, AI
applications, and blockchain implementations, is dissected in the following section, emphasizing its
transformative impact on risk assessment, modeling, and prediction.

Amidst these technological strides, cybersecurity emerges as a central concern, warranting dedicated
exploration. The rising threat landscape in the digital realm prompts an in-depth analysis of how financial
institutions address and mitigate cybersecurity risks. Furthermore, the literature review delves into the
growing significance of ESG considerations within risk management practices. Financial institutions are
increasingly integrating ESG factors into their risk assessments, aligning with global trends and
responding to heightened awareness among investors about the broader implications of financial
activities.

As we embark on this exploration, the aim is to uncover insights that will contribute to a nuanced
understanding of the intricate relationship between technology, sustainability, and risk management in
the financial market. By synthesizing existing knowledge, identifying gaps, and highlighting emerging
trends, this literature review sets the stage for a deeper examination of the subject, offering valuable
perspectives for both academic and practical considerations.

25
 1. Technology’s Transformative Impact:

o Technology, including fintech solutions, AI, and blockchain, revolutionizes risk

assessment, modeling, and prediction.

o Artificial Intelligence (AI) components, such as natural language processing (NLP) and
predictive maintenance, enhance risk assessment accuracy and speed.

o Integration of AI into incident response planning minimizes disruptions and aids recovery
from unforeseen events.

2. Cybersecurity as a Central Concern:

o Financial institutions face escalating cybersecurity risks, including identity theft, malware,
ransomware, and cyberattacks.

o Vigilant risk management is essential to safeguard operations and protect against threats.

3. ESG Considerations:

o Environmental, Social, and Governance (ESG) factors gain prominence. Financial

institutions integrate ESG criteria into risk assessments.

o Aligning with global trends, ESG-awareness among investors drives responsible risk
management.

26
 2.2Review of opportunities and challenges in the industry

Opportunities

● Technological Advancements for Efficiency Gains:

The integration of fintech, AI, and blockchain presents a significant opportunity for financial
institutions to streamline operations, reduce costs, and enhance overall efficiency. Automated
processes, data analytics, and advanced algorithms contribute to more effective risk assessment
and management.

● Enhanced Data Analytics for Informed Decision-Making:

The wealth of data available in the digital age allows financial institutions to employ sophisticated
analytics tools. This enables a deeper understanding of market trends, customer behavior, and
emerging risks. Improved data analytics can contribute to more informed and strategic decision-
making in risk management.

● Real-Time Monitoring for Proactive Risk Mitigation:

The shift towards real-time monitoring, facilitated by technology, provides an opportunity to

identify and address risks promptly. Automated systems can detect anomalies and potential threats,
allowing for swift responses to mitigate the impact on market stability.

● Fostering Innovation and Product Development:

The intersection of finance and technology opens avenues for innovation in financial products and
services. Financial institutions can leverage technology to create novel risk management solutions,
including customized insurance products, risk-sharing mechanisms, and other innovative financial
instruments.

● Integration of ESG Factors for Sustainable Finance:

The increasing emphasis on environmental, social, and governance (ESG) factors offers an
opportunity for financial institutions to align their risk management practices with sustainability
goals. Integrating ESG considerations can enhance the long-term sustainability of investments and
contribute to positive societal and environmental outcomes.

27
 Challenges:

1. Cybersecurity Risks and Data Privacy Concerns:

The digital transformation in finance brings heightened cybersecurity risks. Financial institutions
face the challenge of safeguarding sensitive financial information from cyber threats. Data
breaches and privacy concerns require robust cybersecurity measures and regulatory compliance
to protect both institutions and their clients.

2. Algorithmic Complexity and Transparency:

The reliance on complex algorithms for risk assessment and trading decisions introduces
challenges related to transparency. Ensuring that algorithms are explainable, fair, and free from
biases is crucial. Striking a balance between innovation and maintaining transparency is a delicate
challenge.

3. Regulatory Adaptation and Compliance:

The pace of technological change often outstrips regulatory adaptation. Financial institutions
must navigate evolving regulatory landscapes, ensuring compliance with frameworks that address
technological risks. Regulatory uncertainty poses challenges in establishing standardized
practices across the industry.

4. Skills Gap and Talent Acquisition:

Embracing advanced technologies requires a workforce equipped with the necessary skills.
Financial institutions face challenges in acquiring and retaining talent proficient in areas such as
data science, cybersecurity, and blockchain technology. Bridging the skills gap is essential for
effective implementation of technological solutions.

5. Balancing Innovation with Risk Aversion:

While innovation is key for staying competitive, financial institutions must strike a balance
between adopting new technologies and managing associated risks. The challenge lies in fostering
innovation while maintaining risk aversion strategies that safeguard the stability of financial
systems.

28
 2.3Literature review related to topic

Concentrate on Efficiency and Liquidity of Stock Market

One of the unmistakable examinations, "An experimental investigation of securities exchange execution
and monetary development: Evidence from India" which inspected the job of financial development in
deciding the presentation of securities exchange. In this examination, it was explored that whether stock
execution prompts financial development or monetary development prompts securities exchange
improvement. Under this examination, stock costs of Bombay Stock Exchange (BSE) and National Stock
Exchange (NSE) were considered and through their investigation it was uncovered that there is no
connection among BSE and GDP yet then again there is a unidirectional connection among NSE and
GDP. In addition, this investigation was directed under double cross ranges for example short-run
elements and long-run elements of financial exchange. (Paramati, 2011)

Behavioral Studies

Lovric M. et al., (2008), exhibited a portrayal model of individual speculator conduct in which venture
choices are viewed as an iterative procedure of associations between the financial specialist and the
speculation condition. The venture procedure was affected by various related factors. They recommended
that this calculated model can be utilized to assemble adapted portrayals of individual speculators and
further examined utilizing the worldview of operator based counterfeit money related markets.

Devi. S and Renuga Bharathi, N (2008) found that the accompanying components to be specific
promotion, chance factor, financial specialist complaints, speculation design, change in way of life, stock
representative help, venture learning, venture data, individual reserve funds, size of venture, monetary
condition and diminishing degree of sensex impacts the view of speculators on speculation.

Kousalya P R and Gurusamy P (2012) in their exploration has presumed that financial specialists settle
on self-choice with respect to their venture. Ventures are made for a time of under three years and there
is a huge connection among age and mindfulness.

29
 The investigation attempted by Anbar and Eker(2010) discovers budgetary hazard resistance is one of
the significant variables which should be concentrated well before settling on speculation choice
.Measuring hazard resilience and deciding the elements that influence monetary hazard discernment are
significant elements which should be considered. In Modern speculation choice model there are four
basic contributions for improvement of money related and venture hazard plans. The data sources
recognized are objectives, time skyline, money related dependability and monetary hazard resilience.
More the hazard disinclined speculators, less the monetary hazard resistance and the other way around.

Risk Element of Investing in Corporate Securities

Preethi Singh (1986) unveiled the essential guidelines for choosing the organization to put resources
into. She opined that understanding and estimating return and hazard is essential to the speculation
procedure. As per her, most speculators are 'chance loath'. To have a better yield the speculator needs to
confront more serious dangers. She reasons that hazard is principal to the procedure of speculation. Each
speculator ought to have a comprehension of the different traps of ventures. The speculator ought to
painstakingly break down the fiscal reports with extraordinary reference to dissolvability, productivity,
EPS, and proficiency of the organization.

Basudev Sen (1997) unveiled the ramifications of hazard the board in the changed condition and the
elements obliging the speed of hazard the board innovation up-degree. He opined that the observation
and the executives of hazard is significant for players and

controllers in a market arranged economy. Venture administrators have begun updating their hazard the
executives’ practices and frameworks. They have fortified the interior control frameworks including
inner review and they are progressively utilizing value research of better quality. He saw that hazard
estimation and estimation issues oblige the speed of up-degree. Additionally, deficient accessibility of
abilities in utilizing quantitative hazard the board models and absence of hazard supporting speculations
for the residential financial specialists are significant imperatives. He reasoned that with the start of a
subordinate market, new instruments of hazard supporting would end up accessible.

30
 Shopping center C.P. what's more, Singh J.P. (1998) underscored the significance of broadening and
acquainting adaptability with lessen chance. They expressed that expansion decreases chances from one
perspective and expands the plausibility of enormous gains on the other. They likewise audited protection
as an exit plan for diminishing the hazard. The monstrous plans help move of dangers to the insurance
agencies, particularly pertinent in farming business.

Hyderabad (2007), in an investigation of hazard the executives measures, called attention to that hazard
the board measures ought to be a nonstop procedure. Expressing that, the procedure should help in
recognizing all hazard factors, examining dangers factors and settling on great proportions of viable
dangers taking care of and control. It discovered that, dangers dealing with and control along these lines
included such exercises as dangers distinguishing proof, dangers measurement, dangers alleviation and
hazard protection. It called attention to that, as different parameters utilized in taking the temperature of
the Capital Market and answering to financial specialists when to purchase and when to sell, there ought
to be a hazard estimation parameter that ought to report the unsafe degree of the Capital Market, so
speculators should realize when to contribute and when not to contribute. A hazard estimation record was
important in the Capital Market. This could help to financial specialists when to anticipate low returns.

Primary Market

Tripathy N.P and Sahu P.K (2000) in their investigation entitled, Behavior Dynamics of Indian IPO
Market: An Empirical Analysis endeavored to see if a stock had been valued

at its natural worth or not and decide the greatness and level of deviations of the market cost. The
investigation inferred that an Indian speculator got awesome comes back from the underlying open
contributions simply after some time in the market. General economic situation was considered as a
variable for the better execution of the new issues. In any case, under valuing at the IPO didn't bring
about good treatment at the prepared contributions.

Roy M.K (2000) directed an investigation to examine the inquiries identifying with the conduct of
backers and financial specialists in another issue advertise. The investigation demonstrated that
estimating for IPO was practically indistinguishable in all created and creating markets subject to slight
varieties relying on institutional and lawful structure of the separate nation.

Kamiru and McGowan (2013), in their examination express that capital market assumes an imperative

31
 job in the advancement of the economy. It gives cooperative energy to the shortage financial units so
they can satisfy their targets and simultaneously carries advancements and development to the economy
in general. Again it is critical to have straightforwardness in the economy and how much
straightforwardness is available ought to be known. Political Stability is a significant imperative for
straightforwardness in the securities exchange and its 30 execution; it gets certainty the speculators and
therefore helps in channelizing their investment funds into the money related market. In light of
investigation of Shah and Verma (2011), it tends to be construed that since the liabilities

SEBI's Role

Pandya (1992), in an investigation, "SEBI: Its Role, Powers, Functions and Activities", saw that as an
administrative and improvement body, SEBI's endeavors toward financial specialist insurance are
fluctuated and boundless. The measures got by SEBI extensively spread measures for distribution
proficiency in the essential market with a reasonable level of straightforwardness. It was discovered that
changes in the optional market foundations, common assets and guideline of different market delegates
or more just for the assurance of the contributing open, were important.

Chandra (1991), in an examination on the best possible working of the protections markets, inspected
the administration strategy of favoring the little investors as far as distribution of offers. The examination
contended that, such an approach experienced a few lacunae, for example, higher issue and adjusting
costs and lesser carefulness about the working of organizations, due to insufficient learning. The
examination recommended that there was a need to wipe out the inclination as that would prompt a
superior working of the Capital Market and would reinforce financial specialists' security. With relative
distribution being supported by SEBI, a move in the strategy was clear. In any case, there gave off an
impression of being some reevaluating on the corresponding assignment after the ongoing encounters
which unmistakably exhibit that such an arrangement could bring about an exceptionally slanted
proprietorship designs.

32
 Barua and Varma (1993), in a related investigation of the trick, characterized the expression
"protections trick" as a redirection of assets to the tune of over Rs. 3500 crore from the financial
framework to different stockbrokers in a progression of exchanges (essentially in Government
protections) during the period April 1991 to May 1992. It discovered that in April 1992, the principal
press report showed up demonstrating that there was a deficiency in the Government Securities held by
the State Bank of India. In barely a month, examinations uncovered this was only the tip of a 23 ice sheet
which came to be known as the protections trick, including misappropriation of assets to the tune of over
Rs. 3500 crores. The trick immersed top administrators of enormous nationalized banks, outside banks
and money related establishments, dealers, officials and lawmakers. The working of the currency
advertise and the financial exchange was tossed in disorder. The trick created such monstrous open
intrigue that it turned into a lasting component on the front pages of papers. An enormous number of
organizations, specifically, the Reserve Bank of India (RBI), the Central Bureau of Investigation (CBI),
the Income Tax Department, the Directorate of Enforcement and the Joint Parliamentary Committee
(JPC) were good to go to researching the different parts of the trick.

Varma (1996), expressed that, it was important to recognize the job of SEBI as a market controller and
the job of Government as the formulator of national financial strategy. The investigation discovered that
it was not the capacity of the market controller to control the miniaturized scale structure of the market so
as to poke stock costs up or down. Any such endeavor is 24 nonsensical and added up to gear stock costs.
The investigation expressed that the activity of the market controller was to make a market domain which
was proficient and straightforward. It expressed that such a domain ought to enable the heading of value
developments to the free play of the market powers as opposed to compel in controls. It expressed that
the administration as the formulator of financial arrangement had an altogether different task to carry out,
that is, the job of controlling the monetary essentials which were a definitive determinants of stock costs.

33
 CHAPTER 3
RESEARCH METHODOLOGY

3.1 Problem identification

The problem identification in this study reveals critical gaps in understanding the holistic impact of
technology and sustainability on risk management practices within the Indian financial market. Existing
research tends to isolate factors like cybersecurity and ESG integration, hindering the development of
comprehensive risk management strategies. Regulatory challenges emerge as the pace of technological
change surpasses regulatory adaptation, resulting in uncertainties for financial institutions. Knowledge
gaps persist within the financial sector, affecting the formulation of effective risk management strategies.
Balancing innovation with risk mitigation poses a challenge, necessitating a fine balance between
embracing advanced technologies and ensuring financial system stability. Limited quantitative analysis
and data frameworks hinder the quantification of the evolving risk landscape. Uncertainties in complying
with ESG considerations demand clearer regulatory frameworks for integration into risk assessments.
Addressing these challenges is imperative for steering the financial industry toward robust risk
management practices aligned with technological advancements and sustainability imperatives.

34
 3.2 Methodology Adopted

Research methodology refers to the systematic approach used to collect and

analyze data in order to answer research questions or test hypotheses. It involves a
set of methods and techniques used to conduct research in a specific field, and
typically includes the following components:

1. Research design: This involves identifying the research question or problem

and developing a plan for conducting the study, including selecting the
appropriate research method, sample size, and data collection techniques.

2. Data collection: This involves gathering data using various techniques

such as surveys, interviews, observation, or experiments. The data can be
either qualitative or quantitative, depending on the research question.

3. Data analysis: This involves analyzing and interpreting the data using
appropriate statistical or qualitative analysis techniques to identify patterns
and relationships.

4. Reporting: This involves presenting the findings of the research in a clear

and concise manner, using tables, graphs, and other visual aids to
communicate the results.

Overall, research methodology is critical in ensuring that research is conducted

in a rigorous and systematic manner, and that the results are reliable and valid.

35
 3.3 Data Collection:

Data Collection Information has been collected from both Primary and Secondary Data Secondary
Sources Secondary data are those which have already been collected by someone else and which
already had been passed through the statistical process. The secondary data was collected through
web sites, books and magazines. Primary data are those which are fresh and are collected for the
first time, and thus happen to be original in character. The primary data was collected through
direct personal interviews (open ended and close ended questionnaires).

Data collection is the process of gathering and measuring information on targeted variables in an
established system, which then enables one to answer relevant questions and evaluate outcomes.
Data collection is a research component in all study fields, including physical and social sciences,
humanities, and business.
While methods vary by discipline, the emphasis on ensuring accurate and honest collection remains
the same. The goal for all data collection is to capture quality evidence that allows analysis to lead
to the formulation of convincing and credible answers to the questions that have been posed. Data
collection and validation consists of four steps when it involves taking a census and seven steps
when it involves sampling.

36
 3.4 Data Analysis Tools and Techniques: -

In this study, data analysis was conducted using Google sheets, as the primary data collection
method involved a survey administered through Google Forms. While Google sheets offers a
range of basic analysis functionalities, it's important to note that the analysis was limited to
the capabilities of this tool.

The gathered information was subjected to descriptive data analysis, allowing for a
comprehensive examination of the data's characteristics and patterns. To ensure accuracy and
consistency, the questionnaires underwent careful scrutiny and necessary adjustments once
the data collection phase was completed. This meticulous approach aimed to enhance the
reliability of the responses and ensure the completeness of the dataset.

Subsequently, the collected replies were transformed into numerical format to facilitate the
application of mathematical analyses. The study employed scaling techniques for certain
questionnaires, enabling a structured evaluation of participants' responses. Throughout the
research, primary data played a pivotal role, which was obtained using a well-structured
questionnaire distributed among the respondents.

By adopting this methodological approach, the research successfully harnessed the power of
a user- friendly data analysis tool, while strategically targeting a diverse set of participants.
The analysis involved both descriptive statistics to gain insights into the data and scaling
techniques for specific questionnaires, enhancing the study's overall comprehensiveness.
Through these rigorous steps, the research yielded valuable and reliable outcomes,
contributing to a deeper understanding of the subject matter at hand.

37
 CHAPTER 4
DATA DESCRIPTION AND ANALYSIS

4.1 DATA ANALYSIS

1. Gender

Interpretation: -

Most respondents are male, constituting the majority (60%). Female respondents make up a smaller
portion (40%), and there's no respondent (0%) categorized as "Others." This distribution indicates a
higher representation of male participants in the survey.

38
 2.Age

Interpretation: -

The majority of respondents are under 25 years old, comprising nearly 40% of the total. Only a
small percentage fall in the other age categories, and none are 56 years or above. This distribution
provides insights into the predominant age group participating in the survey.

39
 3. Occupation

Interpretation: -

The occupation data reveals a diverse respondent profile, with students constituting 20% of the sample,
followed by salaried employees at 53%, business professionals at 26.7%,

40
 4. Income Level

Interpretation: -

The respondents' income distribution reveals a diverse range, with various income brackets
represented in the survey. This diversity is crucial for capturing a comprehensive
understanding of investor sentiments, as it incorporates perspectives from individuals with
varying financial capacities. Analyzing the survey results based on income levels will
provide insights into how sentiments and preferences may differ across different economic
strata.

41
 5. How familiar are you with the term "risk management" in the financial context?

Interpretation: -

The majority of respondents showed a moderate to high level of familiarity with the term "risk
management" in the financial context, as indicated by their responses clustering around the upper end of
the scale (3 to 5)

42
 6. In your opinion, how important is effective risk management for the stability and growth of
the Indian financial market?

Interpretation: -

: Respondents generally perceive effective risk management as crucial for the stability and growth of the
Indian financial market, with a majority assigning importance ratings in the higher range (3 to 5) on the
scale.

43
 7) Which of the following risk areas do you consider most significant in the Indian market today?

Interpretation: -

The distribution of responses indicates varying perceptions of significant risk areas in the Indian market,
with diverse opinions on the importance of different risk factors.

44
 8} How concerned are you about the potential rise of cybersecurity threats in the Indian
financial market due to factors like fintech, AI, and blockchain?

Interpretation: -

The responses highlight the level of concern among participants regarding the potential increase in
cybersecurity threats in the Indian financial market attributed to advancements in fintech, AI, and
blockchai

45
 9} Do you think regulatory bodies are adequately addressing the evolving cybersecurity challenges
in the financial sector? (Yes/No)

Interpretation: -

The binary responses indicate the participants' perspectives on whether regulatory bodies are effectively
addressing the evolving cybersecurity challenges in the financial sector.

46
 10) Where do you primarily seek information for making financial decisions?

Interpretation: -

This question seeks insights into the participants' primary sources of information for financial decision-
making, shedding light on the channels or platforms they trust and consult when making financial
choices.

47
 11) How important is it for financial institutions to incorporate sustainability considerations into
their risk management practices?

Interpretation: -

This question aims to gauge the participants' perception of the importance of integrating sustainability
considerations into risk management practices for financial institutions. It provides insights into the level
of importance they attribute to environmental, social, and governance (ESG) factors in the context of risk
management.

48
 12) What factors are most crucial for you when considering an investment?

Interpretation: -

This question explores the participants' priorities when contemplating an investment. It helps discern the
significance they place on various factors such as financial returns, stability, social responsibility, and
innovation in influencing their investment decisions.

49
 13) To what extent does your awareness of risks influence your financial behavior (e.g.,
saving, investing)?

Interpretation: -

This query seeks to understand the impact of risk awareness on respondents' financial behavior. It aims to
gauge whether their awareness of risks, ranging from no influence to complete influence, influences their
decisions related to saving and investing.

50
 CHAPTER 5

SUMMARY CONCLUSIONS

5.1 Findings and Conclusion:

Importance and Objectives of Risk Management

This chapter deals with an overview of risk management. The chapter covers the introduction of
financial system in India, financial market with their parts, brief detail of risk which entail
always in financial market, need for risk management, risk management, process, approaches,
importance and risk response planning before investing in particular dimension.
This chapter also reveals the importance of risk management, policies need to identify the
issues of risk management and strategies of risk management to handle the risk which are
prevail in financial market either in capital market or in money market.
Chapter 2 – Review of Literature
This chapter includes all the review of existing literature related to this study which had done
previously. Many eminent scholars and researchers reveal the importance of risk management
and its impact on decisions. A brief summary contains introductory part of review of literature.

Chapter 3 - Management of Risk

The chapter reveals the common risk involved in the financial market and also highlights the
strategies and controlling techniques of capital market and money market. This chapter covers
not only details about capital and money market but also give the clue about these markets that
money market is more safer than capital market.

Chapter 4 - Role of Securities and Exchange Board of India

This chapter reveals the role of SEBI and its contribution in the market of primary and
secondary of capital market. SEBI is the chief regulator in regulating the terms and conditions
of financial market. Details about SEBI functions, powers and responsibilities as well as role in
primary market (new issue market i.e. IPO) and secondary market etc. The chapter also
highlights the preventive steps taken by SEBI in relation to various famous scandals as well as
give guidance to educate investors through the issued

guidelines. This chapter gives u glimpses of how SEBI works step by step to overcome the
problems in relation to investors’ protection.

Chapter 5 - Credit rating and Credit Rating Agencies in Risk Management

This chapter deals with the concept of credit rating and its importance in risk management. This
chapter also reveals the role of credit rating agencies in assessing risk and also includes the
rating symbols which are provided by different rating agencies of India. Every agency has
different rating symbols and these symbols provide the information to investors about the risk
involved in particular securities.

51
 Chapter 6 - Investment Pattern and Risk Management
This chapter specially focuses on the investment decisions of investors and their investment
behavior. Investment behavior is highly affected by factors that are present around like political
factors, sociological factors etc. This chapter also proposes the investors’ investing habit and
their preferred avenues at the time of investment.

Chapter 7 – Research Methodology

This chapter covers the introduction of research, study of dependent and independent variables,
research design, sampling techniques, sample size, disadvantages of questionnaire, objectives of
the study and respondent details.

Chapter 8 – Data Analysis and Interpretations

This chapter is most important part of research. It contains entire data which are collected
through primary source. This chapter includes tables, charts which made on basis of collection
of data. The analysis is purely based on questionnaire.

Chapter 9 – Summary, Findings, Suggestions, Limitations, Conclusion and Scope of Study in

Future
Chapter summary, findings made on the basis of questionnaire investigation, suggestions given
to the investors and individuals in respect of investment decisions,

limitations of the study, and also include future perspectives of the study and last but not least
the conclusions made on the basis of research study.

Conclusion:

Risk management plays vital role in minimizing risk in different investment. Through this
concept investors can easily trace the risk by applying various strategies at different levels and
enhance the level of returns by minimizing their risk. To get maximum profit in less period,
investor made his own basket of securities by considering all risk involved in securities either
with the help of his friends / family or with the help of his broker.

In this proposed study employees has been categorized on the basis of their i.e. fixed income
and variable income. Fixed income employees take part in financial
market as per their nature of service to which they related whereas variable income employees
take part only on the condition to which business they related. Fixed income employees are
mostly independent while taking decision regarding the investment and on another side variable
income employees take decision as per the volatility of the market.

52
 5.2 Recommendation of study
Recommendations:

The various segments of market have to be favorable as per their needs of investors and funds should be
disassembled by short, intermediate and long term capital funds etc so that the investors would come
ahead with properly arranged of their investment.
Due to scarcity of knowledge of securities market it is not easy for investors to differentiate properly the
risk involved in different avenues of investment. Hence, present and prospective investors are strongly
advised to allocate funds among various carrying risk and profitability securities to seek useful
consultants from experts possessing sound knowledge of financial market.
The requirement of investors is day- to – day reveal of market conditions. Hence, the data providing
agencies have a duty to give favor to investors and keep them well informed about the securities.
Before entering into the proposal of schemes, an investor should be well versed to judge the risk which is
included in the given schemes. The right and accurate information give a positive response to investors in
regard to their investment
The investors should spend some time to understand about the company’s reputation before getting on
them. This is more important in case of financial market where the profile and background of the
company can have significant impact on the returns.
The funds have to be overruling the minds of the investors regarding the safety and tax savings as the
most important factor affecting the investment in different avenues by the investor. Hence, there is need
for developed strategies for enhancing the common investor confidence such as good return, transference
investor education, guidance etc.
Majority of investors are Private employees and stock investors have a clear perception regarding
investment whereas on other side Government employees

and trade businessman are not clear with the objective and constraint of their investment. Hence the SEBI
have to provide the high level of quality education to bridge the gap between the lack of awareness and
risk elements in investment.
The investors’ should spend some time to understand about the company’s reputation before investing.
This is more important in the case of financial market where the profile and background of the company
can have a significant impact on the returns.
Risk and the associated rewards are seen as a major deriving factor with any investment decisions.
Investors should take some time to understand their risk taking ability and convince themselves of their
risk propensity before landing into any investment decisions. Often the risk and returns are directly
proportionate to each other, so this can be taken as a thumb rule for any decisions related to investment.
Investors are the hub of the capital market. Their satisfaction is the most important and it can be done
only by providing safety return, return and liquidity for their investment.
It is to noted that investors perceived the equity funds to be better investment alternative. Hence, the
SEBI duty is to keep the investors with high confidence level.
Investors should concentrate more on getting information of various securities at the time of selecting
investment options. They require to be provided with more information related to investment surround by
the capital and equity fund offerings.
SEBI have to concentrate on better corporate governance, so that more and more individuals become
investors in future.

53
 5.3 Learning of the study

a) Government employees are not actively participating in financial market. Their sense of decision
in investment is negative and their slope area of interest is always down due to varied fluctuations in
market. They always retain their interest in Government securities because these securities carry fixed
return and work in safer zone.
b) Private employees play safe in market, their interest is not restricted to Government securities.
These employees participate only as per the situation of the market and they are sometimes flexible in
nature while investing in securities of financial market. Their level of interest highly depends on income
category.
c) On comparison, private employees straightforward follow the market situation time to time
because at some area they think that one can get return high if they adhere to the principles of investing
and keep vigilant.
d) Private employees follow the guidelines issued by SEBI in respect of securities so that they take
advantage of high returns at low cost. On contrary, Government employees adhere to the footsteps of
guidance only on the condition that whatever they invest in market always give return and not themselves
to bear loss.
e) Generally, scam happened in the market affected adversely the morale of investors to invest in
securities. Scam creates the fear in minds of investors and their conscious does not allow them to get
involve in market. Risk management is only way that investors follow to protect their money in market
and get benefited even in case of large scams.
f) Earning is ever increasing in capital market but at the same time these markets carry high risk.
The money rotation is going rapidly in capital market as compared to money market. As per present
scenario investors invest their
money in capital market on long term basis and earn higher returns and on other side in money market
investors constantly keep investing.
g) The techniques are of great help in mitigating risk that involved in securities. The investors
belong to Private as well as Government sector apply techniques while choosing securities which they
want to buy and make their return safe.
h) Diversification works importantly when a person makes his mind to invest money in securities
market. Government sector investors implement this method and diversify their portfolio so they can get
maximum benefit at least risk but in comparison to Private investors their rating of investment is low.
i) Primary and secondary markets are two big sources of income. Nowadays people trying to invest
money in primary market i.e. IPO (Initial Price Offerings) and raise their funds accordingly. The thinking
of investors change automatically by the time.
j) Corporate securities carry high risk with high returns. The investors of private sector take chance
of investment in these securities because their perceptions are relatively different and they see the things
of financial market always positive.

54
 5.4 Strength and Limitations of Study

Strengths of the Study:

To safeguard interest of investors in financial market, SEBI issues guidelines regularly. It is

specifically suggested that present and prospective investors must study such guidelines while
taking any investment decision in financial market so as to minimize risk and maximize profits
and return as well.

It is suggested that one must not put all eggs in one basket. Investment must be made in different
securities out of saving. Investment may be made in short term securities after analysis of trend
moving in financial market and some long term investment may be made so as to earn long term
gains. It is also suggested that some expert advice must be sought so as to maintain return and
profitability and security of investment as well.

Mutual fund is becoming chief source of investment. There are so many mutual funds instituted by the
financial institutions. Hence, suggested to select mutual fund very carefully and study the financial
results of different mutual fund. It is also suggested that team associated with mutual fund terms and
conditions must also be attached utmost significance as their decision to make investment in financial
market is crucial to valuation of investment.

Stock markets as compared to other developed countries are not functioning at advanced stage. SEBI
play an important role to regulate and control the functioning of stock market in India. There is always
apprehension of injustice with those investors who are either uneducated or unaware of regulations.
Therefore it is suggested to hold investors’ educating programmes from time to time with reliable
agencies not only in some selected areas but must try to access to rural areas so that on one hand
investment is potentially increased but also safeguard the interest of investors.

As studies suggest that financial market is highly sensitive. Up and downs occurred not substantially
due to performance of corporate bodies but to factors like political instability. International political
changes also affect a market to

55
 5.5 Future scope of Research

The concept and importance of risk management in investment has been investigated by the researchers in
the past. Focus of earlier studies has been on the risk management applied by various financial institutions
and intermediaries. The importance of risk management and SEBI guidelines in reference with investment
is still lucrative in rural and undeveloped areas. In the rural areas the individuals do not know the word
“financial market”. The duty of SEBI is to enlarge the areas of investment in rural or undeveloped areas by
conducting education programmes from time to time. SEBI also needs to motivate the young individuals
which reside in rural area as well as give the guidance related to investment in financial market. So
individuals of rural areas take active part in financial market, which directly increase the growth of an
economy.

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 BIBLIOGRAPHY AND REFERENCES

Books / Journals

1. Bhole, L.M.(2004). Financial Institutions and Markets: Structure, Growth and Innovations.
(4th ed.). New Delhi : Tata McGraw Hill Publishing Company Limited.
2. Bhalla, V.K. (2002). Management of Financial Services. New Delhi: Anmol Publications
Private Limited.
3. Marrison, Chris. (2005). The Fundamentals of Risk Measurement. (pp. 2-4). India: Tata
McGraw-Hill.
4. Periasamy, P. (2008). Financial Management. India: Tata McGraw Hill Education India)
Private Limited.
5. Sharan, Vyuptakesh. (2009). Fundamentals of Financial Management. (2nd ed.). (pp. 32-
33). India: Pearson Education.
6. Mazumdar, N.A. (2002). Financial Sector Reforms & India’s Economic Development
(Vol. 1). (pp.64-73). Ghaziabad, India: Academic Foundation.
7. Kumar, Ajay., Chatterjee, D.P., Chandrasekhar, C. & Patwardhan D.G. (2005). Risk
Management. Mumbai: Indian Institute of Banking and Finance.
8. "Committee Draft of ISO 31000 Risk management" (PDF). International Organization for
Standardization. 2007-06-15.
9. Dun & Bradstreet.(2007).Financial Risk Management.(pp. 7-9). India: Tata McGraw- Hill.
10. National Stock Exchange of India Limited (2002) Indian Securities Market
(Vol.5).(pp.165)
11. Shleifer, A. (2000) ‘Inefficient Markets: an Introduction to Behavioral Finance’, Oxford
University Press.
12. Cirvante, V.R., The Indian Capital Market (Geoffrey Cumberlege Oxford University Press,
Bombay, 1956).
13. Simha, S.L.N., The Capital Market of India (Vora & Co., Publishers Pvt. Ltd., Bombay,
1960).
14. Barker, Barry., Investment In India (Bombay, 1961).
15. Shroff, K.R.P., History and Present Position of The Stock Market In India (The Stock
Exchange Bombay,1962)

16. Raghavan, R. S. (2005), “Risk Management – An Overview”, in S. B. Verma (ed.) Risk

Management, Deep and Deep Publications Pvt. Ltd., New Delhi, pp – 321.

17. Srivastava, R. M. and Nigam, Divya (2007), “Management of Indian Financial

Institutions”, Himalaya Publishing House, Mumbai.

18. Carey, Anthony. (2001). Effective risk management in financial institutions: the turnbull
approach. Balance Sheet, 9 (3), 24-27. DOI:10.1108/
09657960110696014

19. Mohan, Amarendra. (2003, May). Risk Management. Banking Finance, 25-26.

20. Sharma, A.K., & Vashishtha, Ashutosh. (2007). Dynamics and regulatory system of Indian
financial markets: a dialectic view. Journal of Financial Regulation and Compliance, 15
(3), 275-302. DOI: 10.1108/13581980710762282. Shastri, R.V. (2001, March).

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 21. Bharati V. Pathak, The Indian Financial System – Markets, Institutions and Services,
Pearson Education, Third edition- 2008.

22. S.Gurusamy, Financial Services and System, Thomson Publishers, First edition –2008.

23. C.F.R.A. (2016). The basics of credit analysis and types of risk. Retrieved 2016, from
Credit & Finance Risk Analysis : www.credfinrisk.com
24. Chakraborty, K. C. (2006, Oct). Management of NPAs: Trends and Challenges,
ICFAI University Press.
25. Daniel, P. S., & Sam, A. G. (2011). Research Methodology. New Delhi: Gyan Publishing
House.
26. Desai, V. (2010). Fundamentals of the Indian Financial System (6th ed.). New Delhi:
Himalaya Publishing House Pvt. Ltd.
27. Foot, M. (2002). Operational risk management for financial institutions. Journal of
Financial Regulation and Compliance, 10(4), 313-316.
28. Fabozzi, F. J. (2004). Managing Credit Risk in Corporate Bond Portfolios. New Jersey:
John Wiley & Sons, Inc.
29. Gestel, T. V., & Baesens, B. (2009). Credit Risk Management Basic Concepts: financial
risk components, rating analysis, models, economic and regulatory capital. New York:
Oxford University Press Inc.
30. Goddard, W., & Melville, S. (2007). Research Methodology:
An Introduction (2nd ed.). Lansdowne Cape Town: Juta & Co. Ltd.

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 ANNEXURE

1. 1) Gender

2. Male
3. Female
4. Other

2) Age

5. 15-21
6. 22-25
7. 26-35
8. 35-50
9. above 51

3) Occuapation
Student
Salaried Emloyee
Business
Retired
Others

4) Income Level
Below 50,000
50,000-100,000
100,000-250,000
250,000-500,000
500,000-10,00,000
10,00,000 and above
How familiar are you with the term "risk management" in the financial context?
Not familiar at all
1
2
3
4
5
Very familiar

59
 6) In your opinion, how important is effective risk management for the stability and growth of the
Indian financial market?
Not important at all
1
2
3
4
5
Extremely important

7) Which of the following risk areas do you consider most significant in the Indian market today?
(Select all that apply)
Cybersecuirty threats
Operational risks associated with Digital Transactions
Algorithmic Trading RIsks
Environmental and social risks (ESG factors)
Other:

8) How concerned are you about the potential rise of cybersecurity threats in the Indian financial
market due to factors like fintech, AI, and blockchain?
Not Concerned at all
1
2
3
4
5
Very Concerned

9) Do you think regulatory bodies are adequately addressing the evolving cybersecurity
challenges in the financial sector? (Yes/No)
Yes
No

60
 10) Where do you primarily seek information for making financial decisions?
Traditional media (TV, newspapers)
Online financial news platforms
Social media
Financial advisors
Other:
11) How important is it for financial institutions to incorporate sustainability considerations into
their risk management practices?

Not important at all

1
2
3
4
5
Extremely important

12) What factors are most crucial for you when considering an investment?

Financial returns
Stability
Social responsibility
Innovation
Other:

13) To what extent does your awareness of risks influence your financial behavior (e.g., saving,
investing)?
No influence at all
Slight influence
Moderate influence
Significant influence
Complete influence

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