Financial Risk Management and Financial Performance of Commercial Banks in Uganda: A Case of Centenary Bank, Mukono Branch

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Date

2023-09-07

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Uganda Christian University

Abstract

The study explored the relationship between financial risk management and financial performance of commercial banks in Uganda: a case of Centenary Bank, Mukono branch. It specifically focused on; examining the relationship between financial risk identification and financial performance, establishing the relationship between financial risk assessment and financial performance and assessing the relationship between financial monitoring and financial performance of Centenary Bank, Mukono. The study was carried out using a cross sectional survey research design where both quantitative and qualitative research approaches were also used. The data was collected using questionnaires and interviews during the data collection, both purposive and simple random sampling methods were used. A sample size of 48 respondents who are management and employees from Centenary Bank, Mukono branch was also used in the study although 44 responded to the study. From the findings, it was revealed that the bank's well-defined procedures and systems for identifying potential financial risks, robust mechanisms for operational risk mitigation, and encouragement of employee reporting contribute significantly to improved financial performance. Additionally, the bank's effective utilization of advanced tools and models for risk assessment and its commitment to regular review and updates of risk assessment processes positively impact financial performance. Moreover, the bank's use of advanced technology for monitoring market trends, regular internal audits, and comprehensive financial statement reviews have a positive correlation with enhanced financial performance. These findings emphasize the importance of proactive risk management strategies and financial monitoring practices for Centenary Bank's sustained success. The study recommended that Centenary Bank should strengthen risk identification and assessment processes through regular updates and knowledgeable evaluations, enhance employee engagement in risk reporting, optimize risk mitigation strategies, leverage technological advancements for monitoring, prioritize compliance and internal audits, nurture a culture of continuous improvement, and emphasize long-term financial sustainability by balancing risk-taking and prudent management for stability and resilience in changing economic conditions.

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This is a dissertation.

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