| dc.description.abstract | The development of the banking industry globally and any business venture regardless of
their temperament and management encounter various kinds of risks in their operations.
Risks being one of an- predictable part of any business, require a well-developed strategy of
risk management to take lead and many financial institution are still faced with the challenge
of risk management in spite of having staff with skilled knowledge. However, Michel Crouhy
et al (2007) clearly stated that institutions can comfortably earn their keep by taking lead in
risk management. This research has therefore looked at the effect of risk management on the
performance of banking institutions in Uganda with specific emphasis on ECOBANK
UGANDA head office.
The study examined the existing literature on the topic under study and the empirical data
required was obtained through questionnaires, review of records and interviews with the staff
and customers and other stakeholders respectively. The data was analyzed both qualitatively
and quantitatively to ascertain the effect of risk management in financial institutions (Eco
bank).
The key findings of the study show that the major risks encountered by financial institution
are; credit risk, liquidity risk, foreign exchange risk, interest rate risk and operational risk.
This is due to the fact that banks provide a myriad of services and involve themselves in
many transactions hence being exposed to all these risks. The findings showed that the lack
of a well-developed risk culture at Ecobank was the biggest challenge in managing risks.
The statistical analysis clearly showed that there is strong relationship between risk
management and performance of financial institutions especially with regard to the return on
equity, return on assets, profitability and net interest margin.
The study therefore, concludes and recommends that to ensure efficient and effective risk
management in financial institutions; the management needs to improve of staff capacity
development, communication channels, development of strong risk culture, formulation of
risk management policies, constant review of the operations, imparted into the stakeholders
of the bank (customers and shareholders), installation of CCTV camerasin sensitivity areas.
Therefore, a lot of efforts need to be put in by all staff of the organization to effectively
enable the management of various risks encountered by the organization. | en_US |
