Assessing Determining Factors Of Best Risk Management Practice Of Ethiopian Commercial Banks

The paper is about “Assessment and Evaluation of best risk management practices” of commercialrnbanks in Ethiopia based on fifteen commercial banks operating in Ethiopia. The number ofrnrespondents was eighty. While collecting the requisite data, five points Likert Scale has been used.rnThe objective of the study was to critically examine determining factors of best risk managementrnpractices of Ethiopian commercial banks i.e., types of risk facing a bank, The extent in which thernmanagement and staff members of commercial banks understand and implement risk managementrnand if or not the staff members of the selected commercial banks aware of the risks associated withrntheir actions and goals. The study also examines how far the banks follow the guidelines ofrnNational Bank of Ethiopia regarding risk management. For this study there are six independentrnvariables: understanding risk and risk management (URM), risk assessment and analysis (RAA),rnrisk identification (RI), risk monitoring (RM), Risk Evaluation (RE), required policy in place (RP)rnand one dependent variable, RMP. Initially, data reliability was found by applying Cronbach’srnalpha. So regression model was applied to analyze the impact of independent variables onrndependent variables. From the analysis it was concluded that there were five variables which havernpositive significance impact on the dependent variable RMP. The study also reveals that creditrnrisk, market risk and operational risk are the major risks to the bankers.rnKey words: Commercial Banks, Risk Management, and Risk Management Practices

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