Assessing the Effect of Risk Management on Organizational Performance: A Empirical Study with Respect to Banking Sectors and Special Reference to Delhi NCR Region

Abstract

Aim:
This study aims to assess the effect of risk management practices on organizational performance in the banking sector, with a special focus on institutions operating in the Delhi NCR region. It examines how various dimensions of risk—business risk, liquidity risk, financial leverage, and organizational characteristics such as size and age—impact key performance indicators like Return on Assets (ROA) and Return on Equity (ROE).

Methodology:
The research adopts a quantitative, cross-sectional design using primary data collected from 410 banking professionals across public and private sector banks in Delhi NCR. A structured questionnaire based on a 5-point Likert scale was used to capture responses related to risk dimensions and organizational performance.

Statistical Methods:

Data analysis was conducted using IBM SPSS software. Descriptive statistics, reliability analysis (Cronbach’s Alpha), normality tests (Shapiro-Wilk, skewness, kurtosis), Pearson correlation, and multiple linear regression were employed to validate the model and test the proposed hypotheses.

Results:
The findings revealed that leverage risk and organizational size & age have a significant positive impact on organizational performance, whereas business risk (variability in asset returns) and liquidity risk exert a negative influence. All null hypotheses were rejected, and the model demonstrated exceptionally high explanatory power (R² = 1.000), indicating a strong relationship between risk management and performance in the studied banks.

Originality/Value:
This study provides a comprehensive, multi-dimensional view of risk management in the Indian banking sector, especially within a high-growth region like Delhi NCR. It is one of the few studies to integrate multiple risk factors and organizational traits in assessing performance, offering valuable insights for bank managers, policymakers, and financial analysts. The empirical evidence enhances current literature and supports the formulation of risk-sensitive strategies for sustainable banking operations.