Operational Risk Management and Organizational Performance of Banks in, Edo State

Abstract

This work examined operational risk management and organizational performance using selected banks in Edo state. The study aims is to investigate the effect of People risk, Process risk, System and technology risk and external risk variables on organizational performance. Relevant literatures on operational risk management and organizational performance were reviewed under conceptual framework, theoretical framework, and empirical review. The theoretical framework was anchored on Extreme Value Theory. Survey research design was adopted. The population of the study is 1967. The statistical formula devised by Borg and Gall (1973) was employed to arrive at the sample size of 386. The tools used in analyzing the data collected were descriptive statistics and correlation analysis. Multiple Regression Analysis (MRA) method was employed in testing the hypotheses. The study discovered that people risk variables had a negative strong effect on organizational performance of the banks in Edo State. Process risk variables had a negative moderate influence on organizational performance of the banks in Edo State, System and technology risk had a negative significant effect on organizational performance of the banks. External risk variables had a positive weak influence on organizational performance of the banks in Edo State. The study concluded that operational risk management has a negative significant effect on organizational performance of the banks in Edo State. The study recommended that banks in Nigeria should analyze people risk variables analysis and establish a policy that will reduce it, while the regulatory authorities should pay more attention to people risk variables. Banks should take the issue of process risk variables very seriously and should put in place, appropriate checks and balances to ensure that process risk variables are made in accordance with banks’ policies. The management of banks should institute stringent measures on system access and navigation and limit system abuse by staff and colleagues. Finally, organizations should lay more emphasis on effective communication on the part of management as this will have a positive effect on the extarnal risk variables. Thus, a comprehensive public relations department is necessary to provide effective feedback and response to public information.