Understanding the Importance and Practices of Operational Risk Management in Ghanaian Banks

Abstract

This quantitative study examines the importance and practices of operational risk management in Ghanaian banks. The objective of this paper is to investigate the practitioner’s understanding of the difference (if any) between importance and practices of operational risk management programs in Ghanaian banks using a survey research design. The survey instrument, used in collecting data from 170 respondents, was duly validated. The results confirmed that there exists a high level of ORM awareness among the respondents. The banks deploy different risk management solutions to control and mitigate operational risk. The study also concluded that there was a clear difference between perceive ORM importance and ORM practices. This meant that there exists a gap between ORM awareness and ORM program practices. The lack of effective implementation of ORM programs are likely to cause an operational risk contagion among banks with very catastrophic impact on the whole financial sector. The study therefore, recommends that bank mangers commensurate ORM awareness creation with practical implementation of ORM programs and policies in their banks to mitigate operational risk hazards.