One of the striking developments in todayâ€™s banking industry is the increasing tendency ofrnbanks engagement in off-balance sheet commitments (OBC). Using off-balance sheet as arnmeans to increase income/profit has been increasing from time to time. On the contrary,rnthere are so many risks resulting from such commitments like credit risk, liquidity risk,rnmarket risks, operational risk, capital adequacy risk, etc. Thus, it is necessary to establishrnsound OBC management system in order to manage the various risks emerged from thesernitems and ensure sustainability of the financial institutions.rnTo obtain an in-depth understanding the overall OBC risk, the researcher employed bothrnquantitative and qualitative data. Qualitative data was gathered from employees of elevenrnprivates banks in the form of questionnaire while the quantitative data were obtained fromrnthe National Bank of Ethiopia for ten years period from 2010-2019. Both descriptive andrnanalytical research methods were applied to assess the OBC management practice and therninherent risk of the product by investigating its relationship with risk and return. Mean asrnwell as standard deviation measures were utilized to analyse the data and to make a broadrnargument to answer the particular research questions. Furthermore, the analysis consideredrncorrelation and regression analysis to test the study hypotheses. Statistical Package forrnSocial Sciences (SPSS) was applied to analyse descriptive statistics, correlation andrnregression analyses.rnAs per the result, OBC is increasing at an increasing trend, and OBC had significantrnnegative impact on the bankâ€™s liquidity and capital adequacy risk, while it had significantrnand positive relationship with revenue but negative insignificant relationship with creditrnrisk and ROE. The study also revealed OBC management practice of the private bankingrnindustry including the role of NBE was found unsatisfactory and not commensurate with therninherent risk that the product bears and its level of exposure.