Risk Management Practices in Commercial Bank of Ethiopia Financial and Non Financial Risk

Abstract

The general objective of this study was to assess risk management practices in commercial bank of Ethiopia both financial and non-financial risks. In this study, the researcher used descriptive research design in order to describe risk management practices in commercial bank of Ethiopia both financial and non-financial risks. The data were collected from 81 employees in the credit risk department, 74 employees in the strategic department and 61 employees in the communication department, 54 employees in the marketing department and 27 managers. Closed-ended questionnaires along with interviews were used for the purpose of data collection. The primary sources of data were sample CBE branches permanent employees and managers. Secondary data was also used which includes published and unpublished information about the study area, books and journals from library and internet. The commercial bank of Ethiopia located in Holeta (5 branches), Ginchi(3 branches), Burayu (13 branches) and Ambo town (6 branches), is selected by using purposive sampling technique. The selections of the employee and managers carried out by using availability sampling technique. The quantitative data analyzed frequency, percentages and mean. The study regarding the credit risk management practices, the study indicated that large number of employee agreed on the opinion the bank is practicing effective credit risk management system. The study found that large number of employee agreed on the opinion the bank is practicing effective operational risk management practices. The study found that large number of employee disagreed on the opinion the bank is practicing effective operational risk management practices. Based on the finding the study conclude banks develop comprehensive and sound risk management document, reviewed and up dated. The study concluded the bank implements monitoring system to detect operational losses. The study also found increased competition lead a bank to offer loans to new subprime customers having poor credit history. It recommended that managers or the responsible persons should assess the nature of the risks facing their business that can be drive variability in performance