The Impact of Enterprise Risk Management on Firm Performance: A Case of Agricultural Bank of Zimbabwe

Abstract

This research focuses on the impact of enterprise risk management adoption on firm performance of Agricultural Bank of Zimbabwe (Agribank). The study looked at the traditional risk management approach and its demerits as well as reasons for moving to ERM. Furthermore, the study explored the benefits of ERM, challenges faced in the implementation of ERM and the top risks faced by banks in the Zimbabwean market. The qualitative data was gathered using survey questions, with the respondents being bank employees. Secondary data was based on the Agribank’s published financial statements and other internal correspondences. The research used ROE as a proxy for firm performance and the components of the COSO framework as independent variables. In general, the findings of the study could not establish significant relationship between ERM adoption and firm. Failure of the study to establish a significant relationship between ERM and the performance of Agribank might be attributed to several factors. It may be that the ERM system takes long to implement as such the resultant benefits may not be realised for a number of years. Furthermore, in 2015 Agribank implemented turnaround strategies that began paying off in August 2015 when the bank posted the first month on month profit since dollarization in 2009.