Risk Management Practices in Commercial Banks and the Effects on Financial Performance: A Case of Selected Commercial Banks in Mwanza- Tanzania

Abstract

This study's primary goal was to evaluate Tanzania's commercial banks' risk management procedures. The study used qualitative methods and both secondary and primary data. Both stratified and purposeful sampling methods were utilized in the investigation. Twenty (20) bank employees and administrators were contacted for interviews, observations, and surveys to gather primary data. Equity and Azania Commercial Bank are two of the participating institutions. The study conducted a documentary review for secondary data. Twenty respondents were interviewed throughout in September 2022. The study found that commercial banks have trouble managing risks since the majority of them appear to be caught in a vicious cycle that alternates between rapid expansion during the "good" times and a near stop when a crisis occurs again. Results show that all targeted banks consistently implement risk management practices, such as guides for risk mitigation and adequate monitoring and supervision of banking operations.

The study recommends that risk mutual understanding should be essential, so that everyone may speak the same language and communicate more effectively. Business leaders should be able to assess the enterprise risk management process of their organization against a benchmark, improve the process, and guide their company toward the specified goals.