Policies to help banks reduce risks could have a null effect or completely opposite effect because firms exhibit a preferred risk level. The objective of this study is to evaluate the effects of risk balancing in the banking sector of the Northern Great Plains region of the USA. A panel model will be used to evaluate the effects of both business risk and financial risk of over 870 banks in the region. The Global Financial Crisis and bank policies will be taken into account. The banks will be separated into three separate population sectors to analyze the effects of different sectors. Results indicate that the risk balancing hypothesis holds true in the banking sector. This is important to both bank managers and policy makers in efficient policy design. Policies to help reduce risk could have the unintended effect when policy makers fail to account for risk balancing hypothesis.