The aim of this research is to explore the practice of Enterprise Risk Management in Ethiopian Private Banks. Currently, there are 16 private commercial banks working in the country, some of which are celebrating their 20 years' anniversaries. To represent all the 16 private banks, the researcher grouped them in two categories. Wegagen Bank, United Bank and Bank of Abyssinia has been selected from the earliest established commercial banks and Abay Bank, Buna international Bank and Berhan Bank were selected from the lately established banks in simple random sampling method with a total number of 51 employees working risk management area from the selected 6 commercial banks.
The data were collected through questionnaire and face to face interview. The questionnaires were distributed to all risk management department staff of each selected commercial banks. The interviews were made with NBE’s bank supervision department and directors as well as managers and directors of commercial banks. 51 questionnaires were distributed, properly filled and fully returned to the researcher. The finding of the research reveals that, the major challenge faced by commercial banks are weak ton at the top, absence of qualified staff, absence of advanced risk management technology and lower management attention and the recommendations were, Banks should have an enterprise risk management committee at management level, Banks should conduct workshops or panel discussion to identify enterprise level risks in each activity and Banks should have comprehensive risk register and database to run their business with smooth operations and absence of interruption.
Table of Contents
1. Chapter 1
1.1. Introduction
1.2. Statement of the problem
1.3. Research Questions
1.4. Objectives of the study
1.5. Significance of the study
1.6. Scope/Delimitations of the Study
1.7. Limitations of the study
1.8. Organization of the Study
2. CHAPTER TWO LITERATURE REVIEW
2.1. Definition of Risk and risk Management
2.2. Historical Development of Risk Management
2.3. Definition of Risk Management
2.4. The Process of Effective Risk Management
2.5. Benefits of effective risk management
2.6. Definition of Enterprise Risk Management
2.7. Development of Enterprise Risk Management
2.8. Benefits of Enterprise Risk Management
2.9. Enterprise Risk Management Process
2.10. Types of risks in banks
2.11. Empirical studies
2.12. Research gap
2.13. Conceptual framework
3. CHAPTER THREE REASERCH METHODOLOGY
3.1. Research Design and Method
3.2. Sources of Data and Sampling Technique the Source of Data
3.3. Instruments and Procedures of Data Collection
3.4. Validity and reliability
3.5. Ethical consideration
4. CHAPTER FOUR RESULTS AND DISCUSSIONS
5. CHAPTER FIVE SUMMERY OF FINDING, CONCLUSION AND RECOMMENDATION
5.1 Introduction
5.2 Summary of findings
5.3 Based on the above fact the researcher draws the following conclusions
5.4 Recommendation
Research Objectives and Themes
The primary aim of this research is to explore and assess the current practice of Enterprise Risk Management (ERM) within Ethiopian private commercial banks, identifying the challenges they face and the steps required for strengthening their risk management functions.
- Assessment of current Enterprise Risk Management practices in Ethiopian private commercial banks.
- Identification of major problems and challenges encountered by banks in managing enterprise-level risks.
- Evaluation of the existing risk management processes within the banking sector.
- Identification of measures and steps taken by banks to strengthen their risk management efforts.
- Provision of recommendations to improve risk management frameworks and operational effectiveness.
Extract from the Book
1.1. Introduction
In the recent years, Enterprise risk management (ERM) has become increasingly relevant for managing corporate risk. In contrast to the traditional based risk management, enterprise risk management (ERM) considers the company’s entire risks portfolio in an integrated and holistic manner. It further constitutes part of the overall business strategy and is intended to contribute to protecting and enhancing shareholders value (Meulbroek, 2002; Hoyt and Liebenerg, 2011).
The need and demand for ERM as a holistic and company -wide risk management framework is a result of several changing internal and external factors in the corporate environment, which involve a broaden risk scope, a higher risk complexity and increasing interactions and dependencies between risk sources. Relevant external factors include e.g. globalization, industry consolidation and deregulation as well as regulatory pressure (Pagach and war 2011).
Furthermore, rating agencies have started to incorporate companies’ internal risk management systems in their rating processes (Hoyt and liebenberg 2011). In general the internal factors can reduce the objective of risk management which is to enhance the firm’s shareholder value (Meulbroek, 2002). Overall, an ERM system thus enables the board and senior management to better monitor the company’s risk portfolio as a whole (Beasley, Clune, and Hermanson, 2005).
Summary of Chapters
Chapter 1: Provides an introduction to the research, defining the scope, problem statement, and objectives regarding Enterprise Risk Management in Ethiopian banks.
CHAPTER TWO LITERATURE REVIEW: Reviews theories and related studies on risk management, Enterprise Risk Management (ERM), and specific risks faced by the banking industry.
CHAPTER THREE REASERCH METHODOLOGY: Details the research design, survey methods, sampling techniques for selecting commercial banks, and data collection instruments.
CHAPTER FOUR RESULTS AND DISCUSSIONS: Presents the gathered data, analysis of survey responses, and discussion of the current risk management practices in the selected banks.
CHAPTER FIVE SUMMERY OF FINDING, CONCLUSION AND RECOMMENDATION: Summarizes the key research findings, draws conclusions based on the data, and provides actionable recommendations for banks.
Keywords
Risk, Risk management, banking sector, national bank of Ethiopia, enterprise risk management, corporate risk, financial risk, operational risk, credit risk, liquidity risk, regulatory compliance, risk appetite, risk register, risk assessment, Ethiopia.
Frequently Asked Questions
What is the core focus of this research?
The research is centered on assessing the practice of Enterprise Risk Management (ERM) in Ethiopian private commercial banks to understand how they manage risks at an enterprise level.
What are the central themes covered in the study?
The study covers the transition from traditional risk management to holistic enterprise risk management, regulatory requirements by the National Bank of Ethiopia, and the challenges banks face in implementation.
What is the primary objective of this study?
The general objective is to assess the level of commitment of Ethiopian private commercial banks toward implementing an Enterprise Risk Management program.
Which scientific methods were employed?
The research uses a descriptive method, applying a survey approach with structured questionnaires distributed to risk management staff, alongside face-to-face interviews with directors and National Bank of Ethiopia supervision officials.
What topics are discussed in the main body?
The main body discusses the historical development of risk management, definitions of various risk types in banking, the ERM process (from identification to monitoring), and empirical findings from selected Ethiopian banks.
Which keywords best characterize this work?
Key terms include Risk Management, Enterprise Risk Management, Ethiopian Private Commercial Banks, National Bank of Ethiopia, and risk identification.
How are Ethiopian private commercial banks selected for this study?
The banks were grouped into two categories based on their establishment period (earliest established vs. lately established) and selected using a simple random sampling method.
What is the significance of the National Bank of Ethiopia's interference?
Respondents overwhelmingly identified the regulatory oversight and interference by the National Bank of Ethiopia as important for guiding and enforcing proper risk management practices in the industry.
What were the major challenges identified regarding bank risk management?
Key challenges highlighted include a weak "tone at the top," lack of attention from management, absence of qualified staff, lack of advanced risk management software, and inadequate training.
- Arbeit zitieren
- Yetayew Alemu (Autor:in), 2020, Enterprise Risk Management in Ethiopian Private Banks. An Assessment, München, GRIN Verlag, https://www.grin.com/document/957881
