Evaluating risk management practices in commercial banks : a case of Centenary Bank Uganda Limited

Abstract

The purpose of the study was to evaluate risk management practices in Centenary Bank Uganda Limited with specific objectives to establish the trend of risk management practices, to analyse the challenges Centenary Bank Uganda Limited is experiencing in improving its risk management practices and also to identify appropriate strategies that can be utilized to improve risk management practices in Centenary Bank Uganda limited. A cross sectional design, quantitative and descriptive designs were adopted. Branches were sampled through simple random sampling. The collected data was tested for reliability and analyzed using SPSS (V23). The background characteristics of the respondents reveal that majority of the respondents were females accounting for 54.2% than males respondents representing 45.8% and majority of the respondents were in the age group of 25-35 years (68.8%) followed by 35-45 years (27.1%). Furthermore majority of the respondents (54.2%) have work experience of between 1-5 years followed by (35.4%) with 6-10 years of working experience. From the findings, risk management practices were found medium in terms of risk governance, risk assessment, risk strategy and risk culture. Challenges do exist in improving risk management practices and these included increased fraud cases, high interest rates, lack of human capacity to manage the available risks, centralized decision making process from the head office, branches are understaffed to handle the risk issues, and lack of flexibility due to strict regulations and procedures. The study further recommended suggested strategies for improvement of risk management practices and these were; improve KYC of customers, have increased trainings in risk management, there should be strict enforcement of procedures and policies, need to recruit specialized skilled personnel in risk management, carrying out active regular risk audits, and staff motivation in terms of improved remuneration among others. Therefore, implementing the above strategies would resultantly improve risk management practices in Centenary Bank Uganda Limited. The study will contribute to existing literature on risk management practice in commercial banks in Uganda and other developing economies. The findings of the study will also be very useful in designing policies and procedures for risk departments in commercial banks. The study will also provide credible and relevant information to design and implement a strategic policy framework to improve risk management practices.