? To address the association between systematic risk management and Profitability ? To give some meaningful suggestions in order to enhance risk management practices in the financial institutions in Sri Lanka.

Plentiful works of early canvassers in risk management were found in the USA, UK and India [3]. The trend towards the adoption of more stylish systematic risk management created an interesting area for researchers to investigate: whether such systematic risk management performs leads to better profitability. Study [4] found that the mere adoption of systematic risk management techniques increase the performance. However, two studies proved otherwise [5,6]. Given the mix results over the years, this study seeks to provide further evidence on the degree of systematic risk management and profitability in Sri Lanka. Based on Literatures following hypotheses is formulated for the validity of the Literature. H1: Systematic risk management is positively associated with Profitability H2: Systematic risk management has an impact on Profitability Author ? : Lecturer in Accounting, Department of Accounting, Faculty of Management Studies & Commerce, University of Jaffna, Jaffna, Sri lanka .

esearch findings presented in the finance and accounting literatures have indicated a trend towards more keen approach in risk management by firms over time. Especially financial institutions are business. Managing the systematic risk at the optimum level is very essential to keep the performance at satisfactory level [1]. There are lots of different types like Business risk, Credit risk which are associated in a business Marcus (2005). In present study the following types are getting priority as per the research problem. In one sense risk can be categorized in to systematic and unsystematic risk. Unsystematic risk is a type of risk that depends on internal business factors and can be minimized through mechanism or designing an effective portfolio. It can be hedged but cannot be diversified R completely away. In fact, systematic can be thought of as diversifiable risk [2]. Financial institutions assume this type of risk whenever assets owned or claims issued can change in value as a result of broader economic conditions. As such, systematic risk comes in many different forms such as, as interest rates change, different asset have somewhat different and unpredictable value responses. Energy prices affect transportation firms' stock prices and real estate values differently. Large scale weather effects can strongly influence both real and financial asset values for better and worse. The Main objective of the study is to find out the impact of systematic risk management on Profitability in finance intuitions in Sri Lanka. To achieve main objective, the following sub objectives are considered.

According to the empirical results of this study, the researchers can drive the conclusions regarding the impact of systematic risk management on profitability. Correlation analysis revealed that there is a positive association between Net Profit and DOL and DOF (0.312 & 0.354). ROCE also has direct association with DOL and DFL at 0.519 and 0.612 and respectively. Similar, there is a moderate positive association between ROE and DOL and DFL (0.419 & 0.567). It reflects the high financial cost management leads to better Profitability.

Financial institutions in Sri Lanka mostly depend on the debt capital. Therefore, they have to pay interest expenses much. The well-developed bond market is viewed as the primary reasons for the observed relationship. The firms don't have efficient investment. Therefore, their investment not enough to increase the profitability and financial benefits. Due to this reason net profit has weak relationship with DOL and DFL.

Regression analysis revealed that R2 value is 0.57 which indicated that systematic risk management impact on 57 percentages.

Here the hypotheses of the present study are tested with the help of the proposed models. H 1 : Systematic risk management is positively associated with Profitability.

It is focused on the point of view of correlation between the systematic risk management and profitability (r= 0.755, p<0.05). Therefore H1 is accepted. H 2 : Systematic risk management has an impact on Profitability.

It can been seen that from the regression analysis which revealed that R2 is 0.57 it means that II.

The study use data of listed companies in the Colombo Stock Exchange (CSE), Sri Lanka. In order to select the sample, convenience sampling techniques method is used. The sample size is 10 Institutions illustrated given in the table 1 systematic risk management has an impact on profitability at the rate of 57 percentage which is significant at 5 percent level. Therefore H2 is accepted.

The following suggestions are recommended to increase the institutional Profitability based on systematic risk management.

? Profitability standards should be established and communicated to the investors. This will help