An analysis of enterprise risk management and its benefits to banks: A case of Ecobank Zimbabwe

Abstract

The study sought to analyse Enterprise Risk Management (ERM) and its benefits to financial institutions. The study built its foundations on risk management gradually building the case of the existence of ERM today. The discussion touched on aspects of traditional risk, benefits, drivers, and implementation of ERM.Furthermore, empirical cases of attempts to correlate the relationship between ERM and firm performance were given.

The study assumed a quantitative bias, though qualitative techniques were also exploited in the process. The research used the COSO model in analysis of risk. The study was a case study of Ecobank (2010-2012) deriving mainly from the claim of managing risks using ERM as observed in the annual reports and the positive performance of the bank during that period.

The study's major finding was the existence of a relationship between ERM variable and firm performance. The study also exposed a high level of risk awareness and responsibility within the institution. The findings were a positive build up of evidence supporting other works already done on the subject.

Recommendations put forward include the need to include risk as a performance metric with acceptable weighting to allow risk owners to assume risk befitting their risk-return trade offs. The areas of further research proposed include, conducting a study of the effect of culture on ERM in Zimbabwe.