| Abstract: | Corporate governance is a system by which business corporations are directed and controlled. It involves
a set of relationship between a company’s management, its board, its shareholders, and other
stakeholders who expect what the corporation ought to be and what structure, composition, and
leadership should it have while existing in business (OECD, 1999). Risk management is a process of
identification, assessment, management and communication of risks in a broad context. Thus, this study
sets out to examine and describe the role of LIB’s board of directors in establishing corporate
governance to ensure sound risk management in the bank in a way it conforms the international and
national principles and standard of risk management. In this regard, as problems are observed in LIB in
relation to establishing risk governance and risk appetite frameworks to ensure risk management in the
bank that hinder proper implementation of corporate governance and risk management of the bank; thus,
the researcher got motivated to examine the corporate governance and risk management of the bank with
objective of examining the role of LIB’s board in establishing sound risk management practices and
identifying the gap between the international and national standard and the LIB’s practices. The
researcher used descriptive type of research and employed review of documents from the LIB board
secretariat office, interview with key informants, chairpersons of the Loan Review and Risk Management
Committee, Audit Committee, and the HR and Business Development Committee, the President and the
Director Risk and Compliance Management Department. It also employed questionnaire to employees of
the bank at various levels of managerial positions and incorporated personal observation. Qualitative
data gathered through interview, and questionnaires are thematically synthesized and Quantitative data
are statistically analyzed. A statistical tool SPSS has been utilized in analyzing the quantitative data. The
research didn’t attempt to gauge the performance of operational risks based on the set limits, ratios, and
matrix parameters, rather endeavors to examine and describe the role of the board in risk management in
light of accepted corporate governance and risk management principles. Hence, the research has
identified some gaps related to lack of provision of intensive training, awareness enhancement, and risk
communication that have effect on hindering corporate governance and risk management functions of the
board. |
