Risk management practices in cash operations among Commercial Banks in Kenya
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Date
2012-10Author
Mutema, Kenneth M
Type
ThesisLanguage
enMetadata
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The main purpose of this study was to investigate the risk management practices in cash operations among the commercial banks in Kenya. The specific objectives of the study was to investigate the forms of risks in cash operations and the risk management practices used in cash orations among commercial banks in Kenya. Respondents were asked to indicate the extent of use of risk management practice in use by their organization in cash operation. A survey of research design sought information from 44 commercial banks operating in Kenya where respondents were risk managers or senior operation managers in these organizations. Following data collection, data was analyzed using descriptive statistics with SPSS statistical package. The stud) showed that although
there are a number of cash operation risk.s facing commercial banks. lack. of integrity
among the staff members and the nature of businesses that the banking organizations deal
with are the major cash operation risks that face the commercial banks. The study further
established that cash operation risk management practices are very critical business
process. due to the nature of business that banks engage in. That explains why there has
been a huge investment to put in place adequate risk management practices across the
industry in an effort to secure the banks business activities. To a very great extent each
bank has engaged the use of the regulators guidelines which provides the minimum
threshold of practices that must be used by all hanks in managing the cash operations
risks. Various levels of exposures to risks. coupled with the need to increase operational
efficiency through better risk management ha\e compelled the banks to engage in more
practices that seem to tighten their control of risks that face them. Hence a very great
extent also banks have engaged practices such as the, use of use of cash limit positions
where there is a set maximum cash holding limit within which each till or branch must not
exceed. observing dual control to process cash instructions and access to strong rooms.
carrying out end of day reconciliation of all entries in the system and use of separate
drawer y) each teller. use of cash registers to record movement of cash. To a great extent
there is use of information systems and of fake currency detecting machines to manage
risks use of professionally qualified risk managers and use. To moderate extent banks
ha'e appropriate disaster recovery planning. identification of stress situations and online
processing of cash transactions to manage risks in cash operations.
Cash operations risk management is part of wider operations risks management that the
banks face and must deal with in order to achieve operational excellence.
The complex processes employed to improve operational efficiency has increased the
probability of failure or mistakes from the operations point of view that necessitates
increased focus on managing operational risks to avoid losses and eventual downfall of the
financial institutions