Risk assessment of banking institutions - a case study of Cal Bank Limited

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The subject of risk is a thorny issue for banks and CAL Bank is no exception. It is imperative therefore for banks to assess risk elements inherent in their activities, especially in the area of credits or lending. The study seeks to answer the question as to whether every risky venture fails and also to answer whether once a credit request passes the Risk Departments test, it will turn out as a good credit and not suffer any default. The objective is to assess the risks financial institutions suffer or are confronted with and to look at how these are identified and managed. The methodology applied to the study was face-to-face interviews with key staff of the Risk Department, Retail Banking Department and the Corporate Banking Department of CAL Bank. Account Relationship Officers from some of the branches of CAL Bank were also interviewed. Random sampling was applied to aid data collection and when it came to analyzing the data descriptive and qualitative tools were applied. The study found out that the vigilance and diligence of the Risk Department helps to reduce the default rate of credit requests. Thus if it were not for risk assessment and management, a lot of credit requests would suffer default and go bad It was thus recommended that CAL Bank strengthens its risk identification and assessment mechanism.
A thesis submitted to the Board of Postgraduate Studies, Kwame Nkrumah University of Science and Technology, Kumasi, in partial fulfilment of the requirements for the award of the Degree of Master of Business Administration, 2008