Abstract: Risk Management Practices is currently a much-debated topic and a new concept being researched and implemented by various large organizations. However, currently there seems to be much confusion on this topic in terms of an overall Risk Management Practices statement. Uncertainty exists, for example, if there must be a statement for each primary risk type the organization faces, or should there be an overall Risk Management Practices statement for the organization Risk Management Practices is about achieving corporate goals. For most Microfinance institutions (MFIs), dual goals exist i.e. the social and economic perspectives. This study sought to analyze the effect of Risk Management Practices on corporate investment in selected micro finance in Rwanda. Specifically, Survey study aimed at establishing the influence of operational risk management practices, strategic risk management practices, financial risk management practices and governance risk management practices on corporate investment in selected micro finance in Rwanda. The study adopted descriptive research design. The study targeted 95 managers from finance and operations departments. The sample size was 77 respondents. The study used both primary and secondary data, where questionnaires, interview and annual reports of the micro finance was used. Primary data for the study was collected using structured questionnaires that were administered to the respondents. Narrative data obtained from interviews and open-ended questions in the questionnaire were analyzed using qualitative approaches. The study revealed that the determinants of corporate investments in micro financial intuitions in Rwanda firms were governance, strategy, operational and financial risks. It was revealed that holding Operational risk, Strategic risks, financial risks and Governance risk to a constant zero, corporate investment in selected micro finance in Rwanda would be at 0.194. A unit increase on operational risks would lead to increase in corporate investment in selected micro finance in Rwanda by a factor of 0.769, a unit increase in Strategic risks would lead to increase in corporate investment in selected micro finance in Rwanda by a factor of 0.824, a unit increase in Financial risks would lead to increase in corporate investment in selected micro finance in Rwanda by a factor of 0.484 and unit increase in governance risks would lead to increase in corporate investment in selected micro finance in Rwanda by a factor of 0.664.The study recommends that in order to effectively manage operations and reduce operational risks the management team needs carefully identify all the risks it may fall
Vulnerable of and establish the appropriate mechanisms to curb unexpected risks whenever they pop up. Risk management will help to reduce surprises, improved planning, enhance performance
And effectiveness and improved relationships with stakeholders. The study recommends that Corporate Social Responsibility is important because businesses are based on trust and foresight. Establishing and keeping trust with customers, communities and regulators isn’t simple and can be easily damaged or lost. To be successful in the long-term, companies need to think beyond what’s affecting them today to what’s going to happen tomorrow. This isn’t just about addressing changes to technology or the needs of customers, but also taking into account alterations in social, environmental and governance issues.
Keywords: operational risk management practices, strategic risk management practices, financial risk management practices, governance risk management practices and corporate investment.
Title: Effects of Risk Appetite on Corporate Investment in Selected Micro Finance Institutions in Rwanda: A Survey Conducted on Selected Banks in Rwanda
Author: David Chege Magu, Dr. Patrick Mulyungi (PhD), Ngusale A Vincent
International Journal of Management and Commerce Innovations
ISSN 2348-7585 (Online)
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