Effective risk management practice in Somalia Islamic banks

Purpose: The purpose of this study was to investigate how financial risk management strategies lead to growth of MFI sector in Kenya.Methodology: The study adopted a correlation survey research design. The population of this study was fifty seven (57) MFIs. The sampling frame was the list of MFIs provided in the AMFI website www.amfikenya.com. A sample of thirteen (17) MFIs was selected using the random sampling approach. A questionnaire and an interview schedule were the main data collection tools. Qualitative data was analyzed using content analysis whereas the quantitative data was analysed using Statistical Package for Social Sciences (SPSS) where descriptive and regression analysis were conducted to determine the relationship between enterprise risk management strategies and growth of MFIs.Findings: The findings indicated that MFIs had effective financial risk management strategies such as effective credit risk management practices, liquidity risk management practices, interest risk management practices and price risk management practices. In particular, MFIs took into consideration the conditions, characters, capacity, collateral and capital of borrowers. Strict debt collection practices were widely adopted by MFIs. In addition, the concept of Know Your Customer (KYC) policy, seem to have been adopted by MFIs. The relationship between financial risk management strategies and growth was positive and significant. It also shown that sources of funds for MFIs include external sources and internal sources and the most frequently used source of funds are bank loans. The use of banks loans may present various risk exposures to MFIs, the most significant being interest rate risk. However, the ability of MFIs to source funds from various sources indicates that MFIs can apply the pecking order by first exploiting internal sources of funds since they present a lower financial risks and then move on to external sources. However, despite the financial risk exposure accompanied by leverage from external sources, MFIs may also benefit as they may experience higher growth driven by the leverage. It was also found that MFIs had put in place a number of good practices that had emerged to promote responsible and inclusive lending. These include loan size limits, standardized (simple) loan terms, zero tolerance on delinquency, group-based lending. This finding implies that MFIs have put in place effective credit risk management policies which are part of an overall financial risk management strategy. The existence of effective financial risk management practices may have influenced the growth of MFIsUnique contribution to theory, practice and policy: The study recommends that the MFIs to continue practicing effective financial management practices as this would improve the growth of MFIs.

Purpose – The purpose of this paper is to evaluate the degree to which Islamic banks in Pakistan use risk management practices (RMPs) and techniques in dealing with different types of risk.Design/methodology/approach – A standardized questionnaire is used which covers six aspects: understanding risk and risk management (URM), risk assessment and analysis (RAA), risk identification (RI), risk monitoring (RM), credit risk analysis (CRA) and RMPs.Findings – This study found that the Islamic banks are somewhat reasonably efficient in managing risk where URM, RM and CRM are the most influencing variables in RMPs.Research limitations/implications – The paper's findings are limited to the RMPs of Islamic banks in Pakistan.Originality/value – This paper explores the RMPs of the Islamic banks in Pakistan. The results can be used as a valuable feedback for improvement of RMPs in the Islamic banks in Pakistan and will be of value to those people who are interested in the Islamic banking system.

The primary objective of this paper is to examine the market risk and liquidity risk management techniques and practices followed by the Indian scheduled commercial banks (SCB) consisting of public sector banks (PSBs) and private sector banks (PVSBs) for five years from 2016-17 to 2020-21. The other objective is to compare market and liquidity risk management practices between the public sector banks (PSBs) and private sector of banks (PVSBs). The other purpose of the study is to review the strategies adopted by the SCBs in risk management practices. To study the risk management practices, six largest banks each from PSBs and PVSBs are taken for sample study. This study finds that the SCBs are facing credit risk, market risk (Interest rate risk, foreign exchange risk, commodity price risk and equity price risk,) liquidity risk and operational risk. It also finds that the PSBs are better reporting and presenting their risk management practices in their annual reports than that of PVSBs in risk identification, risk assessment and risk analysis. The results indicate that there is no significant difference between the PVSBs and PSBs in the policies and practices of market risk and liquidity risk assessment, evaluation, monitoring risk controlling and risk taking. This paper will be relevant and value to those interested in research in the risk management banking industry. This is a descriptive research based on secondary data.

The study is conducted to research the RMP and procedures pursued by conventional banks functioning in Peshawar region. In the study the risk management (RM) is elected as a dependent variable, whereas Risk assessment (RAs), risk identification (RI), risks monitoring (RMn), risk analysis (RA) and RMP (RMP) are taken independent variables. Data is collected through questionnaires on five Likert Scale. Total number of questionnaire distributed were 120, out of which 102 questionnaires were received with positive response from the banks. As per the regression, we found from the results that risk assessment and analysis, risk analysis and RMP have significant effects, and risk identification and risk monitoring have insignificant effects on RMP. The paper`s findings are limited to RMP`s of conventional bank operating in Peshawar region. This study will of value to those who are interested conventional banking industry.Classification-JEL:

Project risks are widespread in the construction industry because of the uncertainty and complexity involved in construction activities. Many factors directly or indirectly affect a project’s successful completion. Therefore, a project’s success largely depends on how it manages risks. This study examines the effect of risk management practices on project success. In addition, it explores the mechanism that leads to project success. Understanding risk management practices and processes that influence project performance is vital for success. This study proposes that three risk management practices (e.g. risk identification, monitoring, and prevention) influence project success. Furthermore, this study maintains that the risk coping capacity mediates, and risk transparency moderates the relationship between risk management practices and project success. We tested the hypotheses using survey questionnaire data provided by 320 project managers. It reveals that risk management practices significantly influence project success. It also finds that risk coping capacity mediates the relationship between risk management practices and project success. Furthermore, risk transparency moderates the relationship between risk coping capacity and project success. This study contributes to the risk management literature by explaining the mechanism that leads to project success. It also discussed theoretical contributions and practical implementations.

This paper investigates the effect of credit risk management on the financial performance of Islamic banks in Jordan in the context of a sample of employees of five Islamic banks. The demographic data showed that the majority of the respondents were in the 31–40 years age group (39.2%) and male (66.7%) and bachelor's degree holders (62.9%) Credit risk management (4.1) and capital adequacy (4.2). The mean score for all the dimensions was between 4 and 5 reflecting a higher position. The time to get a loan approved was rated mid-size (3.5) – indicating operational improvement potential. The findings revealed a substantial positive correlation between credit risk management variables and financial performance indicators, with ROA at 0.72 and ROE at 0.68. The resource for performing structural equation modeling (SEM) confirmed the positive relationship between credit risk management and financial performance, with fit indices CFI = 0.95 and RMSEA = 0.05 suggesting a good fit. The above findings highlighted the importance of effective credit risk management practices to improve Islamic banks' financial performance and financial soundness. The study recommends improving their training programs, streamlining loan approval processes, increasing reliance on FinTech, ensuring compliance, aiming for diversification, strengthening customer relationship management, and carrying out regular risk assessments. Possible studies in the future are to investigate the impact of new financial technologies and the regulatory alterations impact on Islamic banks' credit risk management practices worldwide.

Deposit Money Banks (DMBs) face formidable challenges in order to operate profitably. As business entities poised to maximise shareholders’ wealth, they need to grow their revenue while at the same time keep their cost of funds as low as possible. The threats to achieving this come from the mandatory cash reserve ratio that restricts reasonable chunk of deposits from being invested, and their attempt to build-up deposit portfolio that tilts more towards non-interest paying demand deposit. Since the most profitable assets of the DMBs are the loans and advances, the booking of these risk assets for credit worthy customers who will meet maturing obligations as at when due, constitutes the greatest task to management. This paper is a study to determine how effective risk management practices have been among the DMBs in the Nigerian financial services sector. Survey research design was employed. The study population consisted of twenty-six (26) DMBs from which 10 were selected using purposive sampling technique. The primary data were obtained through a validated structured questionnaire. Reliability of the instrument was assessed, yielding Cronbach’s Alpha coefficients for the constructs that ranged between 0.818 and 0.873. The collected data were analysed using Relative Importance Index (RII) and Mean Score Index. Findings revealed that risk management practices were effective among the DMBs in Nigeria with RII of the 7 segments in the risk management practices above 0.80. The board of directors’ involvement came highest with 0.90. The use of loan syndication came last with 0.82 within the risk management strategy segment. The study concluded that the active interest of the board of directors in the risk management practices contributed immensely to the effectiveness among the DMBs. The study recommends that the Central Bank of Nigeria should bring down the cash reserve ratio that restricts credit creation and causes high cost of funds, and also pay interest rate on cash reserves held by the bank.

This study investigates corporate strategies for integrating non‐financial risks and stakeholder engagement into business management frameworks. Our inquiry analyzes the extent to which companies explicitly or implicitly incorporate stakeholder perspectives into their risk management practices. Based on the four fundamental pillars of risk management outlined by the Institute of Risk Management (IRM 2002), this study seeks to elucidate the multidimensional and comprehensive nature of stakeholder engagement in risk management processes. This study is based on a content analysis of 253 sustainability reports and Non‐Financial Statements drawn from different categories of companies representing the Italian market: large companies, small and medium‐sized enterprises (SMEs), cooperatives, and public utilities. The results reveal that companies primarily address risk management and control in their reports, aligning with the literature. Although risk components are equally important in managing adverse events, the results show a high percentage of risk analysis unlike what emerged from the literature, and a smaller percentage of companies focused on risk monitoring and risk communication. Stakeholder engagement levels vary based on company type and the activities performed in the risk governance process. From a theoretical perspective, this study contributes to systemic risk management research by integrating stakeholders into risk governance models. From a managerial perspective, this study offers implications for both risk management and sustainability disclosure practices. Limitations include the sample of Italian companies only and the different publication years of the collected reports.

Risk Management is recognized as an important exercise that creates value to a project and improves project performance. Time, cost and quality are the primary measures of a project performance in this industry. The success or failure in any construction project can be monitored through the attainment of these primary measures. Notably, Malaysian construction industry is considered as one of the important industries that positively contribute to the increase of Gross Domestic Product and subsequently the growth of the country’s economic development. Unfortunately, this industry suffers poor performance in which it leads to failure in accomplishing effective time, cost and quality performance. Most construction projects face a schedule delay, cost overrun and are poor in product quality. Thus, the aim of this study is to determine the influence of risk management on construction project performance of Malaysian companies based on these three primary measures. The degree of diffusion of risk management practice in the chosen construction project in Malaysia is also examined. The methodological approach exploited in this study is a case study approach involving analysis of documented data and face-to-face interviews with key players that hold different roles and responsibilities. They include a director, project managers, finance managers, contract managers and quantity surveyor managers. The results demonstrate that adopting effective risk management practices positively impacts project performance thus leading to project success. Nevertheless, the lack of knowledge and poor communication of risk management practices in construction projects contribute to the weak implementation of an effective and systematic risk management practices in Malaysia.

The research paper aims to examine respondent's profile, in percentage, so as to identify the results of covariance and analysis of variance between role and experience level, critical risks in construction projects based on response, correlation between performance indicators, the influence of overall performance on profitability of a firm, the reliability of performance indicators, and to develop a risk assessment and management model. The results revealed that there is a significant positive correlation between project quality, project cost control, and on-time delivery with overall performance, while procurement risk is the highest factor of risk as opined by the respondents among all other risks. The risk management cycle consists of nine kinds of processes: 1) risk identification and assessment; 2) risk budgeting and monitoring; 3) risk elimination plan; 4) risk register monitoring and controlling; 5) risk treatment process; 6) risk dilution performance; 7) risk significant impacts and mitigation; 8) reconciling risk budget; 9) re-structuring the risk budget.

PurposeDemographics are perceived to influence risk management practices (RMPs) in construction. However, empirical evidence supporting this perception is lacking in the South African Construction Industry (SACI), especially within small and medium enterprises (SMEs). This study, therefore, aims to investigate the influence of demographic characteristics on RMPs.Design/methodology/approachThis study followed a positivist research philosophy, using a questionnaire survey for data collection. In total, 225 questionnaires were distributed, of which 187 were returned from conveniently sampled respondents, which included owners and senior managers of construction SMEs organizations in Gauteng province in South Africa (SA). In total, 181 questionnaires were usable, yielding a response rate of 80.44%. Data from the survey were analyzed using descriptive and inferential statistics i.e. multiple regression analysis (MRA). The outputs were represented using percent and regression coefficients values, respectively.FindingsIn total, 42 practices were established from the literature review and grouped into 9 major RMPs. The data analysis suggested that understanding the organizational environment, defining objectives, resource requirements, risk measurement, risk identification, risk assessment, risk response and action planning, communication and monitoring and review are reliable and valid practices. Findings from MRA established that demographic characteristics i.e. experience in the construction industry (CI), education level and the number of employees in the organization are not good predictors to determine the use of RMPs.Research limitations/implicationsThe study was limited to the data acquired from the SACI and to a lesser extent, construction SMEs in Gauteng. Therefore, the findings cannot be generalized to all SMEs in SA. Though neighboring and developing countries can use the RMPs identified in this study, the results cannot be directly used in developed countries without adequate substantiation.Practical implicationsThe current study provides useful information to assist construction organizations to pay more attention to risk management implementation. The RMPs established in this paper are reliable and valid in projects undertaken by SMEs, and therefore, may be used by top management and/or the risk task team of these enterprises for effective project risk management.Originality/valueThe study presents findings of an investigation of the influence of demographics on RMPs from the perspectives of construction SMEs, an area less explored. This work advances knowledge of RMPs in the SME sector. It, therefore, adds value to researchers and industry practitioners on the theme where no agreement has been attained relating to key factors and practices that should constitute a risk management model.

Effective risk management is crucial for the success of oil projects, particularly in volatile markets like Pakistan. This paper examines the key organizational capabilities and external factors that influence risk management practices and project performance in the Pakistani oil industry. Through a comprehensive literature review and analysis of industry reports, the study identifies critical risk factors, effective risk management strategies and the role of organizational competencies in navigating these challenges. The findings suggest that a proactive, data-driven approach to risk management combined with strong project management capabilities and stakeholder engagement can significantly improve project outcomes. The research provides valuable insights for oil companies operating in Pakistan offering a framework to enhance their risk management practices and increase the likelihood of successful project delivery. The oil industry is inherently complex and fraught with various risks ranging from political and economic instability to technological constraints and regulatory hurdles. Specific to the Pakistani context, the sector faces a unique set of challenges that can significantly impact project performance. Analyzing the interplay between organizational capabilities and external factors is crucial for developing effective risk management strategies to navigate these turbulent waters. This research aims to comprehensively examine the elements influencing project performance within the Pakistani oil sector. The study will explore how various risk management practices including risk identification, assessment, mitigation, and monitoring, might influence project results. The research will also examine how organizational competencies such as skilled personnel, risk management resources, and governance frameworks, can contribute to the successful delivery of oil projects in Pakistan. Pakistan's oil industry is subject to a range of context-specific challenges that can profoundly impact project implementation and performance. Effectively managing these risks is vital for oil companies operating in the country as inadequate risk management can compromise project safety, environmental protection and overall profitability.

PurposeThe purpose of this paper is twofold: first to add to the debate on good governance and ethics of enterprise risk management (ERM) and second to describe an ethical maturity scale based on duty and responsibility for practical implementation to ensure better governance.Design/methodology/approachThe methodology has centred on risk governance as a way for many organisations to improve their risk management (RM) practices from an ethical perspective based on responsibility and on fulfilling one's duty within the organisation.FindingsWhile companies in Australia, for example, are more mature than those in Russia in terms of governance systems life cycle, there are a number of common international challenges in risk governance implementation. These relate to a link between risk framework, enterprise value model and strategic planning; to a definition of risk appetite, the embodiment of RM in organisational culture, internal audit and ERM function, the evolving role of a chief risk officer (CRO) and senior management buy‐in and sponsorship of the integrated ethical RM from a chief executive officer.Practical implicationsERM – a way for many organisations to improve their RM practices – is a key component of the applied ethics of corporate governance. It has developed into a philosophy to assist organisations with the process of protecting shareholders' value while also increasing the bottom‐line profitability. Effective ERM is based on ethical risk governance. Internal audit needs to be involved in the process of integrating RM and compliance. It should maintain a degree of independence when assisting with ERM establishment. CRO is most effective when reporting to the board.Originality/valueGlobal companies are becoming more accountable to multiple stakeholders. It is the adoption of an ethical code to arrest the lack of clarity of roles ascribed to the audit committee and risk committee and management's accountability or lack thereof that remains the challenge across different jurisdictions. In attempting to implement good governance and meet the challenges, the paper introduces an ethical maturity scale as an internal measure that could be embedded in an organisation's strategy.

Risks of foreign economic activity are a key factor that should be taken into account when making management decisions, since they directly affect the final financial result of a company and the prospects for its strategic development. The article examines the main tools used in the global practice of risk management in foreign economic activity, with a focus on the advantages and disadvantages of their application. Risk management in foreign economic activity involves identification of risks from the general population and development of ways to minimise the economic losses associated with them with the help of appropriate tools. The article provides techniques and methods of risk management in foreign economic activity and describes automated systems used in the world practice of risk management. The most common tools used in risk management are allocated: probability and impact matrix, risk data quality assessment, risk identification, SWOT-analysis, risk register, root cause analysis, decision-making, risk taking, risk reassessment, brainstorming, risk monitoring, Delphi technique, checklists, reserve analysis. The disadvantages of the tools used are the subjectivity of users’ judgements, the labour intensity of the process and the need to process a significant amount of information. The article also reveals the advantages and disadvantages of using automated tools used in risk management, in particular, such as: Mitratech Alyne, Corporater, Splunk Enterprise, Resolver, Cority, Lockpath Keylight Platform, Diligent, Essential ERM and SAI360. It has been determined that an important advantage of many platforms is their focus on GRC (Governance, Risk and Compliance), which is aimed at managing risks in accordance with the organisation`s business goals and in compliance with legal, regulatory requirements and industry standards. Other advantages include continuous real-time monitoring functions for prompt decision-making and the ability to integrate with other business intelligence tools. The main disadvantages of the automated systems in question are the complexity of use and partial unsuitability for small businesses, the need for additional staff training, and the lack of transparent pricing for most programmes.

This study evaluates the risk management practices employed by agricultural cooperatives with the aim of enhancing profitability and farmer resilience. Agricultural cooperatives play a crucial role in supporting farmers, particularly in mitigating risks associated with environmental, economic, and market fluctuations. By analyzing various risk management strategies, including insurance, diversification, and financial planning, this research assesses their effectiveness in improving cooperative profitability and strengthening farmers' ability to withstand external shocks. Through a combination of qualitative and quantitative methods, data was gathered from a sample of agricultural cooperatives, focusing on their approach to managing risks and the impact of these practices on their operational success and farmer welfare. The findings suggest that effective risk management practices not only improve the financial stability of cooperatives but also enhance the resilience of farmers, enabling them to cope better with market uncertainties and climatic changes. This study highlights the importance of adopting comprehensive risk management frameworks within agricultural cooperatives and provides recommendations for strengthening their role in promoting sustainable agricultural development. The results of this research contribute to the broader discourse on agricultural risk management and the role of cooperatives in fostering long-term farmer resilience and economic stability.