We have an application and we would like to test that application by enabling IMAP.

i would like to know what is the security risk if we enable IMAP on Exchange as i have read on various articles that IMAP is not secure and it transmit user name and password in clear text.

please advise.

In general, POP3 and IMAP4 are not secure as other protocols to access Exchange server. It is definitely recommended that you go with Outlook HTTPs based connectivity or Outlook Web App. However, if you must use IMAP (or POP) make sure that you enforce encryption on these connections. That will require that you have proper certificate on Exchange side. 

Thanks for the reply.

Can you please advise what needs to be taken care of in Enabling IMAP4 on Exchange and also please refer me to some articles which will help me in doing this.

Appreciate your help.

Actually, it's pretty simple thing to do. See here for instructions : http://technet.microsoft.com/en-us/library/bb124489(v=exchg.150).aspx