Corporate risk management and performance of selected financial institutions in Uganda

Abstract

The purpose of this research was to investigate the relationships between corporate risk management, and performance of selected financial institutions in Uganda. Specifically, this study examined whether operational risk management, credit risk management and financial risk management were related to the performance of commercial banks.

A cross sectional correlation approach was used to undertake the study. A purposive and random sampling method was used in selection of the banks and the respondents respectively. A total of 121 respondents were used to collect data about corporate risk management and performance of financial institution. The research utilized both primary data and secondary data, the primary data was collected by use of a questionnaire where variables were measured using a li-kert scale while the secondary data was based on desk research. Pearson correlation coefficient was used to measure relationships between the independent and dependent variable, regression analysis estimated by least square estimation method was employed to determine the factors significant for bank performance and the ANOVA which measured the differences in risk management practices by the various banks. All the analysis was conducted using a statistical package for social sciences (SPSS).

The finding showed that there is a positive relationship between corporate risk management and bank performance. It also showed that financial risk management and risk management processes are the two areas which were most significant to the performance of the financial institution. However, credit and operational risk management though found to have a positive relationship with performance of commercial banks, they were not significant in predicting the bank performance. This therefore implies that banks must pay much more attention to the risk management processes and the financial risk management practices which were found to be significant if they are to improve or maintain their good performing trend.