Hence, risk management focus on the identification of potential unanticipated

events and on their possible impact on the financial performance of the firm and at
the limit on its survival. Risk Management in its current form is different from
what the banks used to practice earlier. Risk environment has changed and according
to the draft Basel II norms the focus is more on the entire risk return equation.

Under Pillar 1 of the specific NRB guidelines, the bank currently follows
Simplified Standardized Approach for
Credit Risk, Basic Indicator Approach for Operational Risk and Net Open Position
approach for Market risk.