Some of the issues that affected the financial sector and caused the collapse of a number of banks in the last two years, were as a result of weak risk management in the respective banks, Evelyn Kwatia, Head of Risk Management for Bank of Ghana has indicated.
“The Bank of Ghana, within the space of two years, collapsed 16 banks and merged five others into the Consolidated Bank of Ghana Limited. These banks were undercapitalised as a result of poor corporate governance. But I will associate this crisis also to weak risk management,” she said.
She made this remark in an interview with B&FT at the opening ceremony of the Africa Convention in Quantitative Methods and Risk Management, hosted by the University of Professional Studies in Accra.
She therefore urged every institution, whether in the financial sector or not, to take risk management very seriously, “Because the moment you are able to identify your risk, you are able to mitigate your risk, derive better benefits; and you will be able to achieve the strategic objective of that organisation.”
In the last decade, risk management in the banking and insurance sectors has witnessed a rise in the importance of operational risk among others, which has attracted the attention of risk managers in financial institutions and regulators.
Speaking at the event, Pro-Vice Chancellor of the University of Professional Studies (UPSA), Charles Barnor, also called on institutions in the country to consider the usage of quantitative techniques in their assessment of risk to improve decision-making.
This, he said, will help to improve risk management and business, which will ultimately boost the country’s economy.
“It’s a very important aspect of decision-making, but in Ghana what we see today is lack of using quantitative techniques in order to make informed decisions for managers in the various sectors of the economy to improve on their decision-making.
“Currently, you will agree with me that some decisions have been made in this country and we may not have considered the right quantitative data for risk in making those decisions. But I believe that after this programme, most of the people here – some of whom are in academia and industry – will be able to assist in the field, particularly the politicians, so that we will be able to make decisions that improve the net worth of this country,” he noted.
He stressed the need for companies to increasingly focus on identifying risks and managing them before they even affect the businesses.
The ability to manage risks, according to him, will help companies act more confidently on future business decisions, saying: “Their knowledge of the risk they are facing will give them various options for how to deal with potential problems”.
The 5-day Africa Convention in Quantitative Methods and Risk Management event is organised by OSL Risk Management, and other leading firms worldwide interested in sharing knowledge and best practices in risk analysis and modelling across business and academic environments.
Participants of the convention, which ended last Friday, were not only certified internationally as Quantitative Risk Managers but also had the opportunity to learn from world experts who have extensive practical experience in the area.