Work

The Assessment of Enterprise Risk Management Practices of Ethiopian Commercial Banks

Year: 2025

Type: article

Abstract: The study aims to examine the enterprise risk management (ERM) practices of Ethiopian commercial banks. This approach is undertaken to examine the current approach to enterprise risk management within the Ethiopian banking context. Mixed methods research design is employed which comprises content analysis and survey. The study found that the prevailing emphasis of risk management functions in Ethiopian commercial banks revolves on ensuring compliance with regulatory reporting standards. A significant number of the banks have implemented ERM programs primarily to meet regulatory obligations, rather than leveraging ERM to generate firm value. The study identified several gaps in the risk management function of Ethiopian commercial banks, including: lack of integration of risk management with the banks' mission and core values, failure to assess the resources required for effective risk management and to prioritize resource allocation accordingly, inadequate coverage of relevant activities and functional areas by both risk management and internal audit activities, and limitations on the assignment of Chief Risk Officers (CROs) to oversee the risk management function within the banks. Overall, the maturity level of ERM implementation among Ethiopian commercial banks is moderate and requires further enhancement.

Source: Risks

DOI: 10.3390/risks13030051

Authors: Tsega Meseret Biresaw, Athenia Bongani Sibindi

Institution: University of South Africa

Language: English

Topic: Risk Management in Financial Firms

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

SDG: Decent work and economic growth

Open Access status: gold

Estimated APC paid: $2,172