The services of the banking sector are used for financing many businesses. In the last decade of the 20th century, some important changes have been noticed in the banking industry. Different strategies are used to increase the efficiency and productivity of the banking sector which also increase the level of risks for banks (Panday, 2009). Banks plays its role in the economic development of the country as well. With the advancement of technology, many changes are observed in the banking sector, which is also challenging. To perform well in the market banking sector adopted many different strategies. According to Akhtar (2007), Pakistani banks are facing new challenges in its business operations which have changed the nature and types of risk. To maintain a competitive advantage and to improve overall performance, banks are seeking ways to understand and aggressively manage the risks that can encounter their business. Supervisor:- Dr. Attiya Yasmin Javed