The Assessment of Enterprise Risk Management Practices of Ethiopian Commercial Banks

Tsega Meseret Biresaw and Athenia Bongani Sibindi ()
Additional contact information
Tsega Meseret Biresaw: Graduate School of Business Leadership, University of South Africa (UNISA), P.O. Box 392, Pretoria 0003, South Africa
Athenia Bongani Sibindi: Department of Finance Risk Management and Banking, University of South Africa (UNISA), P.O. Box 392, Pretoria 0003, South Africa

Risks, 2025, vol. 13, issue 3, 1-34

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. A mixed-methods research design is employed which comprises content analysis and a survey study. 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 prioritise 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.

Keywords: motivators to implement ERM; common type of risks in banks; maturity level of ERM implementation; risk management tools; risk appetite (search for similar items in EconPapers)
JEL-codes: C G0 G1 G2 G3 K2 M2 M4 (search for similar items in EconPapers)
Date: 2025
References: View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.mdpi.com/2227-9091/13/3/51/pdf (application/pdf)
https://www.mdpi.com/2227-9091/13/3/51/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jrisks:v:13:y:2025:i:3:p:51-:d:1609992

Access Statistics for this article

Risks is currently edited by Mr. Claude Zhang

More articles in Risks from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().