Assessment Of Risk Management Practice In Ethiopian Commercial Banks

Abstract

In a world that always shows signs of change and with each change coming up with various ways of doing business to achieve results, risk administration and the ways adopted to oversee those identified risks is a basic issue to the company. The late global monetary crisis served as an update that risk management and how the same is honed is very key if executional goals are to be reliably accomplished. The main core objective of this study was to assess risk management practice including financial and non-financial risks in the Ethiopian commercial banks. The financial risks are credit risk, liquidity risk, Market risk and the non-financial risks are operational risk, Strategic risk and reputational risk. This study employed a descriptive research design to investigate aspects of risk management. a structural questionnaire served as the primary data collection instrument. Both quantitative and qualitative research approach was used. The researcher was utilized purposive sampling technique to collect Data from risk department employees, strategic department employees, customer experience department employees, credit department employees and marketing department employees. The study found that all banks in the study had adopted and practiced good risk management practices. However, some banks showed need for improvement in managing strategic and reputation risks. The study recommends that banks strengthen their strategic risk management practices by developing a clear a strategic risk management framework and conducting regular risk assessments. The study also recommends that banks improve their reputation risk management practices by implementing effective reputation risk management policies and procedures