Risk Control Systems in the Bankning Sector : A Case of Intercontinental Bank Ghana LTD

Abstract: Risk management as a component of the internal control mechanism of any organisation is as important as the reason for the existence of that organisation. This is because any organisation without a risk management system in place may as well not be in existence since they may lose the profit and the whole capital together. Every organisation needs to put in place risk management and internal control systems in order to achieve the ultimate objectives of the organisation. This research work sought to examine the implications of risk management, particularly the effectiveness of internal controls as a risk management tool in improving bank performance. Specifically to identify risk associated with providing banking services, to explore the viability of Intercontinental Bank’s internal control systems as risk management tool, to access the impact of internal control as risk management tool on IBG’s performance. The Financial Sector was chosen as according to information from the Ministry of Finance and Economic Planning, the financial services sector contributed 56.7 percent by way of total assets to the gross domestic product (GDP) at the end of January 2008. This represented a significant growth from 31.9 percent at the end of December 31, 2005 and the sector is likely to be more prone to risk (Yeboah, 2008). Purposive sampling technique was used in choosing Intercontinental bank as a case study and also the availability of research information was considered. Employees of the bank were surveyed on various internal control mechanisms that must be in operation and their effectiveness. The management of the bank were also interviewed since they are the regulators, implementers and supervisors of those internal control systems. Some of the risk associated with providing banking services identified were: availability of organisational objectives, availability of competent staff, and provision of resources, risk management policies and technology. The findings showed that the bank was doing well in putting all the internal control mechanisms that must be in place and the supervision of the control mechanisms was quite strong. However, their weakest point was the allocations of resources to enable personell perform certain risk sensitive duties like advancing credit to customers in SME (small and Medium Scale) business category. It was recommended that risk management policies of the bank must be updated regularly to avoid them to getting irrelevant with time. Also, the bank must make the effort to resource all departments/units of the bank with the right number of experienced and trained staff for them to be able to carry out their task in a manner that avoids the occurrence of unnecessary risk.