| dc.description.abstract | The aim of the study was to establishing the effects of risk management on financial
performance in banking institutions and was conducted at Diamond Trust Bank, main branch.
The study objectives were to: assess the risk management practices in the banking institutions,
establish the level of financial performance of banking institutions and establish the relationship
between risk management and the performance of banking institutions.
The study took a case study research design where both qualitative and quantitative research
approaches were employed. 50 employees of Diamond Trust Bank acted as respondents. During
the study both primary and secondary data was collected. Primary data was collected from the
respondents who were employees of Diamond Trust Bank where as secondary data was collected
from the internet, documentary reviews, journals and other publication. Data was analyzed with
the help of Excel and presented in frequencies tables, as well as on graphs.
The study findings indicated that Diamond trust Bank does not possess a risk management
department and besides that the bank has a centralized decision making system about risk
management policies in all its branches. This impedes managers from making financial decisions
depending on the type of clients they deal with but they are rather forced to making decisions
depending on the general bank policies and IT systems which are vital in data collection and
analysis are not being used. It was found out that financial performance level of profitability of
Diamond Trust Bank is not up to the expected level; although the company is making profits, its
level of profitability is not up the required level; the company sometimes generates positive
economic profits but are not as regular as it should be.
The study concluded that there is a positive relationship between risk management and financial
performance of banking institutions. Poor risk management practices such as centralized decision
making about risk makes some branches to lose out on potential clients. It was recommended that
banking institutions need to refocus more on risk management, and that top management in
banking institutions should try as much as possible to ensure that they build a risk management
culture among all employees. Decentralization of decisions regarding risk management needs to
be encouraged. By doing this, different branches would not have to miss out on some clients | en_US |
