RISK MANAGEMENT AND PERFORMANCE OF MULTINATIONAL COMPANIES IN KAMPALA, UGANDA

ABSTRACT

This study focused on Risk management and performance of multi-national companies in Uganda, a case study of Barclays Bank, Uganda. The study objectives were to find out common risks multi-national companies like Barclays Bank face, to establish the relationship between risk management and performance of multi-national companies like Barclays Bank and to establish the impact of risk on performance of companies.

The study adopted a cross sectional research design, it was quantitative in approach. The study population was, a sample of 160 respondents were used purposively and randomly selected to participate in the study. Questionnaire was used for data collection.

Basing on the results of study findings, the researcher recommends that; since the Bank is mostly affected by liquidity, interest rate and exchange rate risks, the management should to manage (control) other risk because liquidity risk is mainly the result of other risks and that multi-national companies like Barclays Bank should constantly carry out risk monitoring so as to identify any new risks that may affect the operation of the Bank.

The researcher suggests that further studies should be carried out on the effect of financial risk management on financial appraisal.

Based on the study findings, the study concluded that multi-national companies like Barclays Bank are mainly affected by liquidity risk and that operational risk and financial risk management enables companies to define their objectives for the future and to perform better forecasts.

All the respondents agreed that operational risk like failure of internal controls affects multi-national companies like Barclays Bank because of inadequate or failed internal processes or people’s mismanagement which leads to losses Majority of the respondents agreed that risk monitoring minimizes exposure of multi-national companies like Barclays Bank to market risk and credit risk, this is because risk monitoring check whether the risk identification, evaluation and assessment have been successful. All the respondents agreed that financial risk management enables the Bank to perform better forecasts.

CHAPTER ONE

Introduction

This chapter introduces the different risks managed by organizations and assessment of risk management procedures in Uganda drawing experiences and literature from other countries and examples in Ugandan context. The section gives a back ground to the problems faced in the process, a statement of the problem and purpose of study.

1.1 Back ground of study

Risk management is an activity which integrates recognition of risk, risk assessment, developing strategies to manage it, and mitigation of risk using managerial resources. Some traditional risk managements are focused on risks stemming from physical or legal causes (e.g. natural disasters or fires, accidents, death).

According to Nassaver Frank and Pausenberger etherified, Risk is an event that results into loss of money and causes availabilities in business cash. The risk management have affected the performance of small and medium businesses it leads to the collapse.

Financial risk management, on the other hand, focuses on risks that can be managed using traded financial instruments. Objective of risk management is to reduce different risks related to a pre-selected domain to an acceptable. It may refer to numerous types of threats caused by environment, technology, humans, organizations and politics. This describes the different steps in the risk management process which methods are used in the different steps, and provides some examples for risk and safety management. Risk is unavoidable and present in every human situation. It is present in daily lives, public and private sector organizations. Depending on the context (insurance, stakeholder, technical causes), there are many accepted definitions of risk in use.

The common concept in all definitions is uncertainty of outcomes. Where they differ is in how they characterize outcomes. Some describe risk as having only adverse consequences, while others are neutral.

One description of risk is the following: risk refers to the uncertainty that surrounds future events and outcomes. It is the expression of the likelihood and impact of an event with the potential to influence the achievement of an organization’s objectives.

The phrase “the expression of the likelihood and impact of an event” implies that, as a minimum, some form of quantitative or qualitative analysis is required for making decisions concerning major risks or threats to the achievement of an organization’s objectives. For each risk, two calculations are required: its likelihood or probability; and the extent of the impact or consequences.

It is recognized that for some organizations, risk management is applied to issues predetermined to result in adverse or unwanted consequences. For these organizations, the definition of risk which refers to risk as “a function of the probability (chance, likelihood) of an adverse or unwanted event, and the severity or magnitude of the consequences of that event” will be more relevant to their particular public decision-making contexts.

When an entity makes an investment decision, it exposes itself to a number of financial risks. The quantum of such risks depends on the type of financial instrument. These financial risks might be in the form of high inflation, volatility in capital markets, recession, bankruptcy, etc. According to Dannie tice and Catherine conneron 2000, Performance is the going process that involves managing the criteria for which an institution agency or project can be held accountable.

Risk management is the process of identification, analysis and either acceptance or mitigation of uncertainty in investment decision-making. Essentially, risk management occurs anytime an investor or fund manager analyzes and attempts to quantify the potential for losses in an investment and then takes the appropriate action (or inaction) given their investment objectives and risk tolerance. Inadequate risk management can result in severe consequences for companies as well as individuals. For example, the recessi Zon that began in 2008 was largely caused by the loose credit risk management of financial firms.

So, in order to minimize and control the exposure of investment to such risks, fund managers and investors practice risk management. Not giving due importance to risk management while making investment decisions might wreak havoc on investment in times of financial turmoil in an economy. Different levels of risk come attached with different categories of asset classes.
For example, a fixed deposit is considered a less risky investment. On the other hand, investment in equity is considered a risky venture. While practicing risk management, equity investors and fund managers tend to diversify their portfolio so as to minimize the exposure to risk.

NC State’s ERM Initiative, in partnership with the American Institute of CPAs, has just released its Report on the Current State of Enterprise Risk Management:  Opportunities to Strengthen Integration with Strategy. Based on survey responses from 446 business executives spanning a number of industries, types and sizes of organizations, the report provides detailed insights about the state of maturity about a number of processes related to their organization’s current state of enterprise risk management (ERM). This is the fifth year that we have conducted similar research in partnership with the AICPA.

Despite the fact that over 55% of the respondents believe that the volume and complexity of risks has increased “mostly” or “extensively” in the past five years and that in over 60% of the organizations the board of directors is asking “somewhat”, “mostly” or “extensively” for increased senior executive involvement in risk oversight, only 20% of them describe the level of their organization’s risk management as “mature” or “robust.” In 2009, we found that only 8.8% of organizations we surveyed claimed to have complete ERM processes in place; by 2013, 24.6% made that claim. However, the fact that only a quarter of organizations surveyed have complete ERM processes in place suggests that there continues to be significant room for risk oversight improvement across most entities. Not surprising, the largest organizations and public companies are much further along, with 55.8% and 52.0% of those organizations, respectively, claiming to have complete ERM processes in place. In contrast, just 13.0% of not-for-profit organizations made that claim.

So, in order to minimize and control the exposure of investment to such risks, fund managers and investors practice risk management. Not giving due importance to risk management while making investment decisions might wreak havoc on investment in times of financial turmoil in an economy. Different levels of risk come attached with different categories of asset classes.
For example, a fixed deposit is considered a less risky investment. On the other hand, investment in equity is considered a risky venture. While practicing risk management, equity investors and fund managers tend to diversify their portfolio so as to minimize the exposure to risk.

In recent years, the tougher regulatory environment and fast-evolving risk landscape are profoundly changing the way an organization manages its risks. The board of directors and senior executives are under increasing pressure from various stakeholders to maintain effective oversight of risk management. At the same time, there’s been a rising interest in risk management as a competitive advantage both in decision-making (tackling the risk the organization wants or needs to take and planning accordingly) and event response (crises management, business continuity, etc.). Such heightened attention may have driven an increase in organizations’ risk management spend.

In the survey, nearly one third of respondents have indicated a marginal or significant planned increase in risk management spend/resources over the next 12 months. Respondents in the Middle East and Africa, and Asia Pacific regions say they are planning to spend more, due to their rising awareness of risk management and risk transfer.

Following years of declining risk management budgets we see this as a very positive trend.

Only three percent of respondents say they are planning a decrease in risk management spend. Risk management is, at present, implemented in many large as well as small and medium sized industries.

In (Gustavsson 2006) it is outlined how a large company can handle its risks in practice and contains a computer based method for risk analysis that can generate basic data for decision-making in the present context. In that study, Trelleborg AB has been chosen as an example to illustrate the difficulties that can be encountered concerning risk management in a large company with different business areas. One typical difficulty is reaching the personnel. Another typical weakness is a missing system for controlling and following up on the results of the risk analysis that has been performed. The multinational companies from which research is to be carried out are in Kampala district, Uganda.

1.2 Problem statement

Only handfuls of companies are not anxious about their risks. There are a number of areas that can be exposed to risks yet can be targeted to prevent the risks from occurrence.

Typically, companies focus on short-term, risk reducing measures to alleviate this problem, but this is a naïve strategy and typically just creates a down ward spiral effect, which becomes harder and harder to stop. A more intelligent approach is to use combinational strategy to identify areas in which implementation of a management-based strategy will stimulate increased performance.

As a result of increasing competition and due to rapid changes in technology, multinational companies are one of the companies which require risk management in order reduce the losses caused by risks. Recently in Somalia, this sector is one of the sectors which of recent has engaged in risk management and yet most multinational companies do not reach the expected performance. This study intends to investigate why risk management has been introduced in multinational and yet companies are not performing expectedly (Bowen, 2009).

1.3 Purpose of the study

The purpose of this study determined the relationship between risk management and performance of multinational companies in Kampala, Uganda.

1.4 Research objectives

1.4.1 General objectives

To correlate the risk management and performance of multinational companies like Barclays Bank in Kampala, Uganda.

1.4.2 Specific objectives

The specific objectives of the study were as follows:

1. To assess different risks managed by multinational companies like Barclays Bank in Kampala, Uganda.
2. To assess the criteria or methods used in risk management by multinational companies like Barclays Bank.

• To determine the relationship between risk management and performance of multinational companies like Barclays Bank in Kampala, Uganda.

1.5 Research Questions

What risks are managed by multinational companies like Barclays Bank in Kampala, Uganda?

What are the characteristics of the respondents of Barclays Bank in terms of age, gender, level of education and marital status?

What are the criteria or methods of risk management on performance of multinational companies like Barclays Bank?

To what extent do risk management techniques have effect on the performance?

1.6 Scope of the study

The study explored how risk management had an effect on performance.

The study was carried out on Multinational Companies a case study of Barclays Bank in Kampala, Uganda and basically involved the Company’s staff, managerial staff, and Human resource office respectively.

The study of risk management and performance was conducted in July 2016 and covers a historical period that ranges from 2016.

The study is based on F. B. Hawley offered his “risk theory of profit” in 1893. According to Hawley, risk in business arose from product obsolescence, a sudden fall in prices, superior substitutes, natural calamities or scarcity of certain crucial materials.

The researcher’s study yielded data and information that was useful for understanding, the effect of risk management on the firm’s performance in multinational firms like Barclays Bank. The findings and recommendations of this study are useful for risk managers. They cannot not rely on hard personnel experience in carrying out management of risks, but make their decisions on concrete knowledge of understanding their risk management to the performance of their respective firms. This helps to improve their financial performances.

The research was to benefit by other researchers to get a basis for further research on impact of risk management on performance of multinational firms like Barclays Bank. This led to the idea for better understanding of risk management and performance.

1.7 Operation of key terms

Risk: A probability or threat of damage, injury, liability, loss, or any other negative occurrence that is caused by external or internal vulnerabilities, and that may be avoided through pre-emptive action.

Management: The organization and coordination of the activities of a business in order to achieve defined objectives.

Risk management: The identification, analysis,  assessment, control, and avoidance, minimization, or elimination of unacceptable risks.

Performance: This is the level at which organizations are achieving their set goals like profitability. Performance is the primary goal of all business ventures. Without performance the business cannot survive in the long run. So measuring current and past performance and projecting future performance is very important.

CHAPTER TWO

LITERATURE REVIEW

2.0 Introduction

This chapter has a review of literature from different authors about the concept of risk management, risk assessment procedures and different risks managed in organizations. The researcher also looks at the benefits of risk management in companies.

2.1 conceptual frame work

Risk management performance of multi-national companies like Barclays Bank.

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2.2 Over view of risk management

Risk is the possibility that an event occurs and adversely affect the achievement of objectives. Risk management is the process that attempts to manage the uncertainty that influences the achievement of objectives, with the goal of reaching the objectives and thus creating value for the organization in which it is applied (COSO, 2004

The risk management process presented as a cycle (based on the designed by A. F. de Wild (Van der Waal, 2010)).

The innovation perspective, also known as critical success factors as used in the balanced scorecard approach (Daniel, 1961; Van der Waal, 2010).

2.3 The different types of risks managed

According to our classification, significant risks are risks that could have a long-term adverse effect on company’s assets, financial situation or profitability.

2.3.1 Financial risk

Random movements in the economic environment affect interest rates, exchange rates, wages and commodity prices. There are a number of methods for managing these financial risks. Select low-cost production sites to manage wages. Adopt a flexible sourcing policy and aim at diversifying the market. Devise a strategy to manage currency risks by using foreign exchange derivatives, such as forward and option contracts and currency swaps. According to (Jack D Glen 1993 international financial corporation), both inflation and its uncertainty influence the planning horizon of firms and their commitment to financial management. Typically, high inflation is volatile inducing firms to devote more resources to the task of financial management; it also forces firms to shorten their planning horizon.

2.3.2 Liquidity risk

It is risk that arises due to the inability to convert or hard asset to cash without a loss in capital or income in the process. The nature of trading activities results into continuous exposure to risks. The companies’ liquidity risk management frame work however is designed to measure and manage the liquidity position at various levels to ensure that all payment obligations can be can be met under both normal and stressed conditions without incurring unbearable costs.

2.3.3 Political risk

Political risks take many shapes. They come in the form of policy actions from national governments, such as regulatory or nationalization programs and they can have adverse effects on your objectives and bottom line. The host country may get involved in a war or experience civil strife or revolution, leading to detrimental political decisions such as laws preventing capital movement. Minimize your exposure to these risks by conducting in-depth research before setting up shop. If the MNC already has a presence in the target country, have a legal basis for recourse if the operations are disrupted by negotiating terms of compensation in advance. Purchasing political risk insurance is also an option. This is the   risk which due to weakness of political system and adverse socio economic conditions in a county for example   strikes, riots, political instabilities (Stroeder, 2008).

2.3.4 Competitive risk

MNC face competition and advances in technology. The risk element is founded on uncertainty about competitors’ actions and the development of competitive technology. Apart from strategies like lowering prices or implementing state-of-the-art technology, rival companies may resort to cyber attacks, digital misinformation and data fraud or theft.

Top of Form

2.3.5 Market risk

we describe market risk as the risk of economic losses resulting from price changes in the capital markets. This includes equity risk, general and specific interest-rate risk, property risk and currency risk. Market risks refer to whether or not there is sufficient demand for what you have to offer at the price you set. Many investors have died penniless, clinging to the belief that the market would beat a path to his door if he designed the better mousetrap.

Due to uncertainties of harvest, rain and economic factor the supply of commodities is not regular. Due to uncertainties supply factors, the price of commodities fluctuates a lot, farmers and manufacturers may suffer due to high fluctuations in the of commodities. This risk can be limited by apply risk management strategies like going for commodity futures and options (Dhanini et al., 2007).

2.3.6 Technology and Operational risk

We define operational risk as the risk of losses resulting from inadequate or failed internal processes, incidents caused by the actions of personnel or system malfunctions, or external events. Technology and operational risks broadly cover everything to do with execution. This is risk that the business experiences when it does not operate as foreseen and it is mainly caused by failure to meet the operating criteria (operating cost) business operating below anticipated capacity level (LiekwegandWeber,2000).

2.4 Methods commonly used by companies to manage risks

Once this process has been completed, you can get down to evaluating the technique which best suit your business and maximise your risk management moving forward.
Here are the four key potential risk treatments to consider.

2.4.1 Risk Avoidance

Obviously one of the easiest ways to mitigate is to put a stop to any activities that might put your business in jeopardy.
However it’s important to remember that risk with nothing ventured comes nothing gained, and therefore this is often not a realistic option for many businesses.

2.4.2 Risk Reduction

The second risk management technique is reduction – essentially, taking the steps required to minimise the potential that an incident will occur.
Risk reduction strategies need to be weighed up in terms of their potential return on investment. If the cost of risk reduction outweighs the potential cost of an incident occurring, you will need to decide whether it is really worthwhile.

2.4.3 Risk Transfer

One of the best methods of risk management is transferring that risk to another party. An example of this would be purchasing comprehensive business insurance.
Risk transfer is a realistic approach to risk management as it accepts that sometimes incidents do occur, yet ensures that the business get prepared to cope with the impact of that eventuality. In practice if the insurance company or contractor go bankrupt or end up in court, the original risk is likely to still revert to the first party

2.4.4 Risk Acceptance

Finally, risk acceptance involves ‘taking it on the chin’, so to speak, and weathering the impact of an event. This option is often chosen by those who consider the cost of risk transfer or reduction to be excessive or unnecessary.
Risk acceptance is a dangerous strategy as the business runs the risk of underestimating potential losses, and therefore becomes particularly vulnerable in the event that an incident occurs.
It is important to take an objective and even-handed approach to business risk management, and not to underestimate the vulnerability of the enterprise.

2.5 Relationship between risk management and performance multi-national companies like Barclays Bank.

The reasons for managing risks are the same as those for implementing a risk management, for example financial risks are a subcategory of the company’s risks. One of the main objectives is to reduce the volatility of earnings or cash flows due to financial risk exposure (Dhanini et al., 2007).  They continued to say that the reduction enables the firm to perform better forecasts. Furthermore, this will help to assure that sufficient funds are available for investment and dividends which improves financial appraisal.

Managing risks is to avoid financial distress and the costs connected with it. Managerial self-interest of stabilizing earnings or the aim to keep a constant tax level can be motives for financial risk management depending on which of the arguments is in the focus of an organization, the risk management can be structured. The focus is either on minimizing volatility or avoiding large losses, this improves on financial appraisal (Drogt and Goldberg, 2008).

The first phase is risk identification. The aim of this phase is to identify all risks, which could interrupttordamagethebusinessdevelopment.Therisksthatshouldbeidentifiedcaneitherhaveanegativeimpacton the balance sheet, the financial statement or the cash flow situation of an organization.. This identification is of great importance as only identified risks can  be handled successfully  in the next steps of risk management(Stroeder,2008).

The clustering allows for an organizationtolateranalyzewhethersomeoftherisksarerelatedandwhethersomeof them offset each other (for example in and outflows in a foreign currency). Furthermore, the clustering will assist to identify the main risks of business, which is of help for future analysis and focus of risk management (Nassauerand Pausenberger,2000).

Next the influence of the different risks and their potential harm to an organization needs to be evaluated. This will require an identification of the costs to an organization incase the risk occurs as well as the probability of occurrence. With help of those values the expected damages of the risk positions can be calculated and the single risks can be evaluated (Scheve,2005).

The risk monitoring should include developments of the risk positions and measures to control them. Moreover, the overall risk situation of the company should be compared to the plan and the risk strategy and deviations should be documented (LiekwegandWeber,2000).

CHAPTER THREE

3.1 Introduction

The purpose of this chapter provides the methodological process of the study. It outlines research design, target population and sample size, research instruments used in data collection, research procedures and ethical considerations in the research process.

3.2 Research design

A research design is a plan and structure of investigating in order to obtain answers to research questions and hypotheses stated (Kothari, 2009).

The study was conducted through cross-sectional survey design. Cross sectional survey design examines several groups of people at one time (Salkind, 2000). Cross sectional survey was particularly chosen because it enables the researcher to study the experience of multinational companies on assessing the effect of risk management which are common in all multinational companies like Barclays Bank.

3.3 Research population

The target population included a total of 160 staff of Barclays Bank in Kampala. The researcher targeted both the top managers as well as other all staff from the different departments in the Bank. It is from the above population that a sample was selected to participate in the research.

Data was acquired from all levels of management of  the company.

Table 3.3.1: Targeted population

Source: primary data

3.4 Sampling design and Procedures

The study employed purposive sampling technique. According to Amin (2005), ”purposive sampling  is the type of sampling where the researcher uses his/her own judgment or common sense regarding participant from which the information is collected. “The researcher developed a list sample from all company levels based on his/her own experience of knowledge  of the group to be sampled and had in mind that these respondents had the information he/she requires. Then, the researcher distributed the questionnaire to finance managers of those companies on the list.

This method of sampling was chosen because it makes the study convenient. There are many multinational companies like Barclays Bank which operate in Kampala with differing operational and financial risks. Such differences bring difference on the level of risk management among companies. Such methods helped the researcher select the multinational company that the researcher thought they give risk management a priority and capable of providing the needed information of the problem in question.

3.5 Sample Size

The total population of this study was 160 and according to sloven’s formula, the sample size of this study was 80. In sloven’s formula, n=N/(1+N*(e) where n=number of samples, N=total population, and e=margin of error, 5%=0.05(Mugenda, 2003)

N= total population

n=number of samples

e= margin of error

n=114

3.5.1 Data Collection Instruments

A questionnaire was designed and administered to a sample of Barclays Bank in Kampala, Uganda. The instrument comprised of 24 questions that included both closed and open ended questions, replacement, profitability measures was used and the relationship between   risk management and performance in their respective company.

This method was used because most managers were busy on their duties and the tool gave them humble time from them to fill the questionnaire at their free time and also it allowed consistency and uniformity throughout the collection process. Mitchel and jolly (2004), self-administered questionnaire is easily distributed to large number of people. Second, self-administered questionnaire often allows anonymity.

In addition to this, it also helped managers to express their experience towards the relationship between risk management and performance in their respective levels. It also helped the researcher to save his time in data collection.

3.5.2  Data Collection Procedures

After the research proposal was approved, the researcher passed administrative process to obtain introduction letter from academic authorities the permission to collect the research within the selected multinational company. The researcher distributed the questionnaire with attached letter of introduction from the university to Barclays Bank. After receiving the questionnaire back, the researcher analyzed the collected data by using Ms excel package.

3.5.3   Validity and Reliability

The reliability of the research instruments concerned with the extent to which the research instrument yields the same results. Questionnaire was pre-tested to two participants before being taken to the field by different respondents. A structured and self-administered questionnaire was used throughout the research to ensure that respondents fill the same questionnaire and the instrument provides the required information. Validity is the quality of the test doing what is designed to do (Salkind, 2000); where reliability consists of both true score and error score.

However, validity means in research the ability to produce findings that are in agreement with theoretical or conceptual values: in other words, to produce accurate results and to measure what is supposed to be measured.

Finally, a research instrument is said to be valid if it actually measures what it is supposed to measure on the other hand, reliability is “dependability or trustworthiness and in the context of a measuring instrument, it is the degree to which the instrument consistently measures whatever it is measuring”(Amin, 2005).

An instrument is reliable if it produces the same results whenever it is repeatedly used from the same respondents.

In this study, the researcher used test-retest method. The researcher is to conduct a pre-test of the instrument on a group to the subject, and waited two weeks.  After the two weeks, the researcher administered the same test to the same group on the same subject, so the instrument produced same results and then the instrument was reliable.

3.5.3 Ethical consideration

The study was carried out with permission and the full knowledge of the managers of the Barclays Bank. No respondent’s name was mentioned in this report. There was need for the researcher to use professional and ethical standards to plan, collect and process data. The researcher made sure that he used the objectives method in data collection. The researcher made sure that any elements of individual bias were subdued in favor of well-systematic and measures.

The methodology chose for the research was selected on the basis of research objectives and not for other reasons. The researcher ensured that he recognized the boundaries of his competence in the selection of methodology and the researcher also made sure that he used only those techniques for which he was qualified by his education training and experience.

Finally, the researcher made sure that he collected data according to accepted research standards ensuring that he won’t mislead those who are to read the research report. The researcher kept all the information given to him very confidential and used only for academic purpose.

3.6 Limitations of the study

Searching of information was not easy because many people were not willing to reveal their financial risk status which was an obstacle to the researcher. Second, the researcher faced a problem of high costs in looking for information from various sources.

3.7 Data Analysis

After the questionnaires were filled by the respondents, the researcher used the raw data from the questionnaires to process by editing, coding, entering in computer statistical programs like excel, spss and then presented in comprehensive tables and charts showing the responses of each category of variables. Data was analyzed quantitatively using percentage and frequencies.

CHAPTER FOUR

PRESENTATION, ANALYSIS AND INTERPRETATION OF FINDINGS

4.0 Introduction

This chapter covers the presentation, analysis and interpretation of study findings in relation to study objectives.

4.1 Respondents’ Bio-data

This section includes; gender, age group, educational level, position of the respondent, years of service with the Bank.

4.1.1 Gender of the respondents

The researcher wanted to get information on gender of the respondent in the study area and the information given was tabulated in table 1 and figure 1 below.

Table 4: 1 Gender of the respondents

Figure 1: Gender of the respondents

Source: Primary Data

The study found out in table 1 and figure 1 above that, 41% of the respondents were male and 59% were female. This implied that companies’ employ more female work than male because they believe that women cause less loss and business risk than men.

4.1.2 Age group of the respondents

Here the researcher was interested in getting information on age of the respondents. The information given was presented in table 2 and figure 2 below;

Table 4:2 Shows age group of the respondents

Figure 2: Shows age group of the respondents

Source: Primary Data

The findings in the above table and figure, revealed that 37.5% of the respondents who were the majority below 25 years of age implying that this was an indication that the companies have active labor force because most of the respondents were in their most active labor force age, 32.5% were within the age bracket of 26-30 years and 30% were within 31- 35 years of age.

4.1.3 Educational level attained by the respondents

Here the researcher had interest in knowing the highest educational level attained by the respondents and the information got was shown in the table and figure below;

Table 4:3 Educational level attained by the respondents

Figure 3: Educational level attained by the respondents

Source: Primary Data

From table 3 and figure 3 above, 6.25% of the respondents had secondary education as their highest level of education, 31.25% were diploma holders and the majorities 62.5% were degree holders implying that they had more knowledge which can make them to control some risk and there were also more knowledgeable about the study problem.

4.1.4 Position of the respondents in the Bank

The researcher’s interest here was to find out the position held by the respondents in the Bank. The information got is presented in the table and the figure below;

CHI-SQUARE TEST FOR FREQUENCIES

Frequencies

CHI-SQUARE TEST

The p-value, denoted by “Asymp.Sig. (2-tailed)”, is .000. This means that there’s a 0% chance to find the observed (or a larger) degree of association between the variables.

Table 4:4 Position of the respondents in the Bank.

Table 4 and figure 4 indicated that 25% of the respondents were managers, 12.5% were accountants and 62.5% had other positions which they specified as Bank’s cleaners, security guards and cashiers.

Figure 4: Position of the respondents in the Bank

Source: Primary Data

4.1.5 Respondents’ period of service in the Bank

The researcher wanted to know how long the respondent had worked for the company. The information that was got is presented in the table and figure below;

Table 4:5 Respondents’ period of service in the Bank.

Figure 5: Respondents’ period of service in the Bank

Source: Primary Data

The above figure and table revealed that 15.7% of the respondents had served in the company for less than a year, 25% said within 1 – 2 years, 40.6% who were the majority mentioned that within 3 – 5 years this implies that most of the employees were experienced and skilled because three to five years’ job experience is very important in job performance and 18.7% said that 6 years and above.

4.1.6 Response on whether risk management affects the performance of the Bank.

The researcher was interested on knowing whether risk management affects the performance of the company. The information got is presented below;

Table 4:6 Response on whether risk management affects the performance of the Bank.

Figure 6: Response on whether risk management affects the performance of the Bank.

Source: Primary Data

Majority of the respondents 62.5% agreed that risk management affect the performance of companies implying that it affects both positively and negatively for example it limits unnecessary spending and 37.5% said it does not affect.

4.2 Common risks multi-national companies like Barclays Bank face

The first objective of the study was to find out common risks multi-national companies like Barclays Bank face. The findings are presented below;

4.2.1 Response on whether operational risk like failure of internal controls affects multi-national companies like Barclays Bank.

The researcher’s aim was to establish whether operational risk like failure of internal controls affects multi-national companies like Barclays Bank as shown in the table and figure below;

Table 4:7 Response on whether operational risk like failure of internal controls affects multi-national companies like Barclays Bank.

Chi-square tests

The p-value, denoted by “Asymp.Sig. (2-tailed)”, is .0882. This means that there’s a 8.8% chance to find the observed (or a larger) degree of association between the variables, therefore there is a high likelihood that the operational risks operational risk like failure of internal controls affects multi-national companies like Barclays Bank.

Figure 7: Response on whether operational risk like failure of internal controls affects multi-national companies like Barclays Bank

Source: Primary Data

Based on the above table and figure all the respondents agreed that operational risk like failure of internal controls affects multi-national companies like Barclays Bank because of inadequate or failed internal processes or people’s mismanagement which leads to losses.

4.2.2 Response on whether multi-national companies like Barclays are normally affected by tax risk

The researcher wanted to know whether multi-national companies like Barclays Bank are normally affected by tax risk. The information that was got is presented in the table and figure below;

Table 4:8 Responses on whether multi-national companies like Barclays Banks are normally affected by tax risk

CHI-SQUARE TEST

The p-value, denoted by “Asymp.Sig. (2-tailed)”, is .000. This means that there’s a 0% chance to find the observed (or a larger) degree of association between the variables, these findings indicates that multi-national companies like Barclays Banks are  not higly  affected by tax risk

Figure 8: Response on whether multi-national companies like Barclays Bank are normally affected by tax risk

Source: Primary Data

Form the above table and figure, 28.1% of the respondents who were the majority strongly agreed and 21.9% that multi-national companies like Barclays Bank are normally affected by tax risk, 20% were not sure of the statement and 17.5% disagreed with the statement.

4.2.3 Response on whether liquidity risk cause deviation of the planned outcome and might lead to lower cash inflows or higher cash outflows

The aim of the researcher here was to find out whether liquidity risk cause deviation of the planned outcome and might lead to lower cash inflows or higher cash outflows. The information got is in the table and figure below;

Table 4:9 Response on whether liquidity risk cause deviation of the planned outcome and might lead to lower cash inflows or higher cash outflows

The study found out that 46.9% of the respondents who were the majority strongly agreed and 28.1% agreed that liquidity risk cause deviation of the planned outcome and might lead to lower cash inflows or higher cash outflows because liquidity measures the ability of the company to cover its’ expenses and it also shows whether the company is able to cope with some losses due to risk occurrence implying that a lack of financial funds can cause problems in the ability of the company to pay its bills on time and by that lead to additional costs, while 12.5% of the respondents were not sure about the statement and another 12.5% disagreed with the statement.

CHI-SQUARE TEST

Source: primary data

The p-value, denoted by “Asymp.Sig. (2-tailed)”, is .046. This means that there’s a 4.6% chance to find the observed (or a larger) degree of association between the variables, therefore liquidity risk causes deviation of the planned outcome and might lead to lower cash inflows or higher cash outflows.

Figure 9: Response on whether liquidity risk cause deviation of the planned outcome and might lead to lower cash inflows or higher cash outflows

Source: Primary Data

4.2.4 Response on whether multi-national companies like Barclays Bank are faced by exchange rate risk whereby foreign exchange rate changes leads to changes in the amount payable / receivable by the Bank.

The researcher’s aim was to get information on whether companies are faced by exchange rate risk whereby foreign exchange rate changes leads to changes in the amount payable / receivable by the business as shown in the table and figure below;

Table 4:10 Response on whether multi-national companies like Barclays Bank are faced by exchange rate risk whereby foreign exchange rate changes leads to changes in the amount payable / receivable by the business.

The study findings showed that 43.75% of the respondents strongly agreed and 31.25% that multi-national companies like Barclays Bank are faced by exchange rate risk whereby foreign exchange rate changes leads to changes in the amount payable / receivable by the business implying that the rate of exchange is not fixed and cannot be fully anticipated a possible change in a foreign exchange rate leads to the risk of changes in the amount of a payable/receivable and by that a change in the amount of money the company has to pay/will receive and only 25% disagreed with the statement.

The p-value, denoted by “Asymp.Sig. (2-tailed)”, is .099. This means that there’s a 9.9% chance to find the observed (or a larger) degree of association between the variables, therefore multi-national companies like Barclays Bank are faced by exchange rate risk whereby foreign exchange rate changes leads to changes in the amount payable / receivable by the business.

Figure 10: Response on whether multi-national companies like Barclays Bank are faced by exchange rate risk whereby foreign exchange rate changes leads to changes in the amount payable / receivable by the business

Source: Primary Data

4.2.5 Response on whether multi-national companies like Barclays Bank face interest rate risk thus a rise in the interest rate leads to higher interest payments

The researcher wanted to know whether multi-national companies like Barclays Bank face interest rate risk thus a rise in the interest rate leads to higher interest payments. The information that respondents gave was presented in the table and the figure below;

Table 4:11 Response on whether multinational companies like Barclays Bank face interest rate risk thus a rise in the interest rate leads to higher interest payments

Figure 11: Response on whether multi-national companies like Barclays Bank face interest rate risk thus a rise in the interest rate leads to higher interest payments

Source: Primary Data

Based on the study findings in table 11 and figure 11 above, 56.25% of the respondents strongly agreed and 31.25% agreed that multi-national companies like Barclays Banks face interest rate risk thus a rise in the interest rate leads to higher interest payments this was an indication companies’ earnings are decreased and can in worst case lead to financial distress, and only 12.5% were not sure of the statement.

CHI-SQUARE TESTS

The p-value, denoted by “Asymp.Sig. (2-tailed)”, is .000. This means that there’s a 0% chance to find the observed (or a larger) degree of association between the variables, this results indicates that multinational companies like Barclays Bank face  may not necessarily interest rate risk thus a rise in the interest rate  may not lead to higher interest payments

4.2.6 Response on whether solvency risk leads to decrease in sales or an increase in costs for example the financing of the Bank.

The researcher wanted to know whether advertising demonstrates new uses for established products. The information that respondents gave was presented in the table and the figure below;

Table 4:12 Response on whether solvency risk leads to decrease in sales or an increase in costs for example the financing of the Bank.

Figure 12: Response on whether solvency risk leads to decrease in sales or an increase in costs for example the financing of the Bank.

Source: Primary Data

From table 12 and figure 12 above, 28.125% of the respondents strongly agreed and 21.875% agreed that solvency risk leads to decrease in sales or an increase in costs for example the financing of the firm this is because it can decrease in sales or increase in costs for example the financing of the Bank and high interest rates, which means that it leads to a deviation from the plan and a loss, while 28.125% were not sure of the statement and 21.875% disagreed with the statement.

CHI-SQUARE TESTS

The p-value, denoted by “Asymp.Sig. (2-tailed)”, is .648. This means that there’s a 6.5% chance to find the observed (or a larger) degree of association between the variables, therefore solvency risk leads to decrease in sales or an increase in costs for example the financing of the Bank

4.3 Relationship between risk management and performance of multi-national companies like Barclays Bank in Kampala, Uganda

The second objective of the study was to establish the relationship between risk management and performance of multi-national companies like Barclays Bank. The findings are presented below;

4.3.1 Response on whether risk identification helps multi-national companies like Barclays Bank to integrate risk data into the strategic decision making and taking decisions

The researcher’s aim was to get information on whether risk identification helps multi-national companies like Barclays Bank to integrate risk data into the strategic decision making and taking decisions. What was found is presented in the table and the figure below;

Table 4:13 Response on whether risk identification helps multi-national companies like Barclays Bank to integrate risk data into the strategic decision making and taking decisions

Figure 13: Response on whether risk identification helps multi-national companies like Barclays Bank to integrate risk data into the strategic decision making and taking decisions

Source: Primary Data

The findings showed that 43.75% of the respondents who were the majority strongly agreed and 31.25% that risk identification helps multi-national companies like Barclays Bank to integrate risk data into the strategic decision making and taking decisions implying that this phase aims at identifying all risks, which could interrupt or damage the business development and only 25% disagreed with the statement.

CHI-SQUARE

According to the findings in the table above the results indicates that the p-value, denoted by “Asymp.Sig. (2-tailed)”, is .000. This means that there’s a 0% chance to find the observed (or a larger) degree of association between the variables, these findings therefore indicates that risk identification helps multi-national companies like Barclays Bank to integrate risk data into the strategic decision making and taking decisions

4.3.2 Response on whether risk analysis and evaluation has increased the productivity of the multi-national companies like Barclays Bank.

The researcher’s interest was to get information on whether risk analysis and evaluation has increased the productivity of multi-national companies like Barclays Bank. The findings are presented in the table and figure below

Table 4:14 Response on whether risk analysis and evaluation has increased the productivity of multi-national companies like Barclays Bank

The study found out that 34.375% of the respondents who were the majority strongly agreed and 21.875% that risk analysis and evaluation has increased the productivity of multi-national companies like Barclays Bank implying that once the risks are identified, they analyzed and evaluated this helps to determine the degree of the identified risks and quantify their financial impact on an organization, 28.125% of the respondents were not certain about the statement and 15.625% disagreed with the statement.

Figure 14: Response on whether risk analysis and evaluation has increased the productivity of multi-national companies like Barclays Bank.

Source: Primary Data

CHI-SQUARE TESTS

The p-value, denoted by “Asymp.Sig. (2-tailed)”, is .036. This means that there’s a 3.6% chance to find the observed (or a larger) degree of association between the variables, therefore risk analysis and evaluation has increased the productivity of multi-national companies like Barclays Bank

4.3.3 Response on whether financial risk management has reduced the degree of losses in the multi-national companies like Barclays Bank

Here the researcher wanted to know on whether financial risk management has reduced the degree of losses in the multi-national companies like Barclays Bank. The field findings are presented in the table and figure below;

Table 4:15 Response on whether financial risk management has reduced the degree of losses in the multinational companies like Barclays Bank.

Figure 15: Response on whether financial risk management has reduced the degree of losses in the multi-national companies like Barclays Bank.

Source: Primary Data

The study findings showed that 40.625% of the respondents strongly agreed and 34.375% agreed that financial risk management has reduced the degree of losses in the multi-national companies like Barclays Bank this implies that financial risk management leads to clear benefits through cost avoidance, cost containment and time savings this will keep the business profitable because of managing financial pitfalls that lead to disaster and 25% disagreed with the statement.

CHI-SQUARE TESTS

The p-value, denoted by “Asymp.Sig. (2-tailed)”, is .023. This means that there’s a 2.3% chance to find the observed (or a larger) degree of association between the variables, therefore financial risk management has may not necessarily reduce the degree of losses in the multinational companies like Barclays Bank

4.3.4 Response on whether risk monitoring minimizes exposure of multi-national companies like Barclays Bank to market risk and credit risk

The researcher was interested on getting information on whether risk monitoring minimizes exposure of multi-national companies like Barclays Bank to market risk and credit risk. The findings are presented below;

Table 4:16 Response on whether risk monitoring minimizes exposure of multi-national companies like Barclays Bank to market risk and credit risk

Figure 16: Response on whether risk monitoring minimizes exposure of multi-national companies like Barclays Bank to market risk and credit risk

Source: Primary Data

Based on the study findings in table 18 and figure 18 above, 15.625% of the respondents strongly agreed and 40.625% that risk monitoring minimizes exposure of multi-national companies like Barclays Bank to market risk and credit risk, this is because risk monitoring check whether the risk identification, evaluation and assessment have been successful implying that it is very crucial for taking appropriate measures in time in case deviations between the actual and planned risk situation are identified, 15.625% were not sure and 28.125% disagreed with the statement.

CHI-SQUARE TESTS

According to the findings in the table above the results indicates that the p-value, denoted by “Asymp.Sig. (2-tailed)”, is .000. This means that there’s a 0% chance to find the observed (or a larger) degree of association between the variables, these findings therefore indicates risk monitoring may not necessarily minimize exposure of multi-national companies like Barclays Bank to market risk and credit risk

4.4.1 Response on whether risk assessment has minimized negative impacts of risk on multi-national companies like Barclays Bank.

The researcher’s interest was to find out whether risk assessment has minimized negative impacts of risk on multi-national companies like Barclays Bank. Findings are presented in the figure below;

Table 4:17 Response on whether risk assessment has minimized negative impacts of risk on multi-national companies like Barclays Bank.

Figure 17: Response on whether risk assessment has minimized negative impacts of risk on multi-national companies like Barclays Bank.

Source: Primary Data

From table 19 and figure 19 above, 61.25% of the respondents strongly agreed and 25% agreed that risk assessment has minimized negative impacts of risk on multi-national companies like Barclays Bank because risk assessment ranges from risk avoidance or prevention, over risk reduction, to transfer of risks and finally acceptance of the risk and 13.75% of the respondents were not sure.

4.4 The impact of risk on performance of multi-national companies like Barclays Bank in Uganda

The third objective of the study was to establish the impact of risk on performance of multi-national companies like Barclays Bank.  The findings are presented below;

4.4.1 Response on whether operational risk management helps multi-national companies like Barclays Bank to define their objectives for the future

The researcher’s intention here was to know on whether operational risk management helps multi-national companies like Barclays Bank to define their objectives for the future. The information got was presented below;

Table 4:18 Response on whether operational risk management helps multi-national companies like Barclays Bank to define their objectives for the future

Figure 18: Response on whether operational risk management helps multi-national companies like Barclays Bank to define their objectives for the future

Source: Primary Data

The study findings revealed that 41.875% of the respondents who were the majority strongly agreed and 33.125% agreed  that operational risk management helps multi-national companies like Barclays Bank to define their objectives for the future because it enables the multi-national companies like Barclays Bank to increasingly focus more on identifying risks and managing them before they even affect the business implying that the ability to manage risk will help the company to act more confidently on future business decisions and only 25% were not sure of the statement.

CHI-SQUARE TESTS

According to the findings in the study shows that p-value, denoted by “Asymp.Sig. (2-tailed)”, is .053. This means that there’s a 5.3% chance to find the observed (or a larger) degree of association between the variables, therefore operational risk management helps multi-national companies like Barclays Bank to define their objectives for the future

4.4.2 Response on whether financial risk management enables multi-national companies like Barclays Bank to perform better forecasts

The researcher’s interest here was to get information on whether financial risk management enables the Bank to perform better forecasts. The findings as presented below;

Table 4:19 Response on whether financial risk management enables multi-national companies like Barclays Bank to perform better forecasts

From the above table and figure all the respondents agreed that financial risk management enables the Bank to perform better forecasts implying that it enables the Bank to stay ahead of the financial market trend and makes it to be sensitive to the future situation.

Figure 19: Response on whether financial risk management enables the Bank to perform better forecasts

Source: Primary Data

CHI-SQUARE TESTS

The findings in the study indicates that the p-value, denoted by “Asymp.Sig. (2-tailed)”, is 1.000. This means that there’s a 10% chance to find the observed (or a larger) degree of association between the variables, therefore financial risk management enables multi-national companies like Barclays Bank to perform better forecasts.

4.4.4 Response on whether financial risk management ensures that the Bank has enough cash to withstand downturns in business cycles

The researcher wanted to get information on whether financial risk management ensures that the companies like Barclays Bank have enough cash to withstand downturns in business cycles. The is shown in the table and the figure below;

Table 4:20 Response on whether financial risk management ensures that multi-national companies like Barclays Bank have enough cash to withstand downturns in business cycles

Figure 20: Response on   risk management ensures that the companies like Barclays Bank have enough cash to withstand downturns in business cycles

Source: Primary Data

The study findings showed that 36.875% of the respondents strongly agreed and 36.25% agreed that financial risk management ensures that multi-national companies like Barclays Bank have enough cash to withstand downturns in business cycles this is because it enables the management of the company to plan very well based on the companies’ available financial resources and 26.875% of the respondents disagreed with the statement.

The p-value, denoted by “Asymp.Sig. (2-tailed)”, is .000. This means that there’s a 0% chance to find the observed (or a larger) degree of association between the variables. These results indicates that financial risk management doesnot ensure that multi-national companies like Barclays Bank have enough cash to withstand downturns in business cycles

4.4.5 Response on whether financial risk management avoids financial distress and the costs connected

The researcher wanted to know whether financial risk management avoids financial distress and the costs connected. The information got is presented below;

Table 4: 21 Response on whether financial risk management avoids financial distress and the costs connected

Figure 21: Response on whether financial risk management avoids financial distress and the costs connected

Source: Primary Data

Based on the study findings in table 21 and figure 21 above, 37.5% of the respondents strongly agreed and 22.5% agreed that financial risk management avoids financial distress and the costs connected this implies that planning for potential risks allows for the creation of a financial business strategy that seeks a constant upward trend because financial business strategy is built literally with the goal of keeping the business profitable and managing financial pitfalls that lead to disaster, while 21.25% were not sure and 18.75% disagreed with the statement.

4.4.5 Response on whether financial risk management avoids unnecessary costs

The researcher’s aim was to get information on whether financial risk management avoids unnecessary costs as shown in the table and figure below;

Table 4:22 Response on whether financial risk management avoids unnecessary costs

Figure 22: Response on whether financial risk management avoids unnecessary costs

Source: Primary Data

From table 22 and figure 22 above, 31.25% of the respondents strongly agreed and 31.25% that financial risk management avoids unnecessary costs because there would be unnecessary expenditures are planned for thus the Bank clearly work within its objectives and vision, while 12.5% were not sure and 25% disagreed with the statement.

The p-value, denoted by “Asymp.Sig. (2-tailed)”, is .013. This means that there’s a 1.3% chance to find the observed (or a larger) degree of association between the variables. The results further indicates that it doesnot agree that financial risk management avoids unnecessary costs.

4.4.6 Response on whether operational risk avoids catastrophe in the Bank

The researcher’s aim was to get information on whether operational risk avoids catastrophe in the Bank. What was found is presented in the table and the figure below;

Table 4:23 Response on whether operational risk avoids catastrophe in the Bank.

Figure 23: Response on whether operational risk avoids catastrophe in the Bank.

Source: Primary Data

The findings revealed that 48.125% of the respondents strongly agreed and 18.75% agreed that operational risk avoids catastrophe in the Bank because it enables the Bank to comply with the set objectives, and 33.125% disagreed with the statement.

CHI- SQUARE TESTS

The p-value, denoted by “Asymp.Sig. (2-tailed)”, is .479. This means that there’s a 4.8% chance to find the observed (or a larger) degree of association between the variables, operational risk avoids catastrophe in the Bank

CHAPTER FIVE

DISCUSSIONS, CONCLUSION, RECOMMENDATIONS AND AREAS FOR FURTHER STUDY

5.1 Introduction

This chapter covers discussions, conclusion, recommendations and areas for further study.

5.2 Discussion of findings

The discussion of findings is based on the statistical data obtained in chapter four and it’s backed by the empirical evidence from chapter two.

5.2.1 Common risks multinational companies like Barclays Bank face

All the respondents agreed that operational risk like failure of internal controls affects multinational companies like Barclays Bank because of inadequate or failed internal processes or people’s mismanagement which leads to losses. This is supported by Liekweg and Weber (2000) who argued that businesses experiences operational risk when it does not operate as foreseen and it is mainly caused by failure to meet the operating criteria (operating cost) or business operating below anticipated capacity level.

The study findings showed that 73.3% of the respondents agreed that multi-national companies  like Barclays Bank are faced by exchange rate risk whereby foreign exchange rate changes leads to changes in the amount payable / receivable by the business implying that the rate of exchange is not fixed and cannot be fully anticipated a possible change in a foreign exchange rate leads to the risk of changes in the amount of a payable/receivable and by that a change in the amount of money the company has to pay/will receive.  This is in line with Stroeder (2008) who said that business generating revenue in local currency involves this kind of risk which are related to the availability and value of foreign exchange for servicing the debt.

5.2.2 Relationship between risk management and performance of multi-national companies like Barclays Bank in Kampala, Uganda

The findings showed that 73.3% of the respondents who were the majority agreed that risk identification helps multi-national companies like Barclays Bank to integrate risk data into the strategic decision making and taking decisions implying that this phase aims at identifying all risks, which could interrupt or damage the business development. This is in line with Stroeder (2008) who argued that risk identification is of great importance as only identified risks can be handled successfully in the next steps of risk management.

The study found out that 56.6% of the respondents who were the majority agreed that risk analysis and evaluation has increased the productivity of multi-national companies like Barclays Bank implying that once the risks are identified, they analyzed and evaluated this helps to determine the degree of the identified risks and quantify their financial impact on an organization. This is in agreement with Scheve (2005) who asserted that the influence of the different risks and their potential harm to an organization needs to be evaluated. This will require an identification of the costs to an organization in case the risk occurs as well as the probability of occurrence. With help of those values the expected damages of the risk positions can be calculated and the single risks can be evaluated.

The study findings showed that 90% of the respondents agreed that financial risk management has reduced the degree of losses in the multi-national companies like Barclays Bank  this implies that financial risk management leads to clear benefits through cost avoidance, cost containment and time savings this will keep the business profitable because of managing financial pitfalls that lead to disaster. This is in agreement with Form (2005) who asserted that a comprehensive financial risk management program prevents inefficiency and duplication that reduces unnecessary costs, boosts productivity, and facilitates consistency and communication.

Majority of the respondents agreed that risk monitoring minimizes exposure of multi-national companies like Barclays Bank to market risk and credit risk, this is because risk monitoring check whether the risk identification, evaluation and assessment have been successful implying that it is very crucial for taking appropriate measures in time in case deviations between the actual and planned risk situation are identified. This is supported by Liekweg and Weber (2000) who said that the risk monitoring should include developments of the risk positions and measures to control them.

5.2.3 The impact of risk on performance of multi-national companies like Barclays Bank in Kampala, Uganda

The study findings revealed that 93.4% of the respondents who were the majority agreed that operational risk management helps multi-national companies like Barclays Bank to define their objectives for the future because it enables the companies to increasingly focus more on identifying risks and managing them before they even affect the business implying that the ability to manage risk will help the Bank to act more confidently on future business decisions. This is in relation with Berk (2009) who said that if an organization defines objectives without taking the financial risks into consideration, chances are that they will lose direction once any of these risks hit home.

All the respondents agreed that financial risk management enables multi-national companies like Barclays Bank to perform better forecasts implying that it enables the Bank to stay ahead of the financial market trend and makes it to be sensitive to the future situation. This is in line with Retzlaff (2007) who said financial risk management enables the business to act quickly on what it sees as good investment scenarios and to work to maximize the financial benefit of these opportunities.

The study findings showed that 70% of the respondents agreed that financial risk management ensures that companies have enough cash to withstand downturns in business cycles this is because it enables the management of the companies to plan very well based on the companies’ available financial resources. This is supported by Wesel (2010) who said that properly managed financial risk ensures organization to have enough cash to withstand downturns in business cycles and shorten recovery times from these downturns.

The findings indicated that 70% of the respondents agreed that financial risk management avoids financial distress and the costs connected this implies that planning for potential risks allows for the creation of a financial business strategy that seeks a constant upward trend because financial business strategy is built literally with the goal of keeping the business profitable and managing financial pitfalls that lead to disaster. This goes hand in hand with Dhanini et al. (2007) who stressed that managing financial risks is to avoid financial distress and the costs connected with it and also managerial self-interest of stabilizing earnings or the aim to keep a constant tax level can be motives for financial risk management.

5.3 Conclusion

Based on the study findings, the study concluded that;

The study concluded that multi-national companies like Barclays Bank are mainly affected by liquidity risk, interest rate risk and exchange rate risk because foreign exchange rate changes leads to changes in the amount payable/receivable by the business.

Risk assessment has minimized negative impacts of risk on multi-national companies like Barclays Bank because risk assessment ranges from risk avoidance or prevention, over risk reduction, to transfer of risks and finally acceptance of the risk and also reduces the degree of losses in the multi-national companies like Barclays Bank.

Operational risk and financial risk management enables multi-national companies like Barclays Bank to define their objectives for the future and to perform better forecasts because it enables the companies to stay ahead of the financial market trend and makes it to be sensitive to the future situation.

5.4 Recommendations

Basing on the results of study findings, the researcher recommends that;

Since the Bank is mostly affected by liquidity, interest rate and exchange rate risks, the management should manage (control) other risk because liquidity risk is mainly the result of other risks, which cause a deviation of the planned outcome and might lead to lower cash inflows or higher cash outflows and the company should have some funds set aside to cater for interest rate and exchange rate risks.

The Bank should constantly carry out risk monitoring so as to identify any new risks that may affect the operation of the companies.

The researcher recommends that the companies should effectively carry out financial risk management because it ensures that organization has enough cash to withstand downturns in business cycles and helps organizations to define their objectives for the future since risks are catered for.

5.5 Areas for further study

The researcher suggests that further studies should be carried out on; the effect of financial risk management on financial appraisal this will give more information on the; forms of financial risk management, process of risk management, benefits of financial risk management to the organizations and the relationship between financial risk management and financial appraisal.

REFERENCES

Chisholm L.  (2010) “Risk identification; basic stage of risk management”, Environmental Management and Health. Vol.13 (3), pp. 290-297

Dhanini et al, Al-Tamimi, H.and Al-Mazrooei, F.M. (2007), “Banks’ risk management: a comparison study of UAE national and foreign banks”. The Journal of Risk Finance, Vol. 8(4), pp. 394-409

Drogt A. and Goldberg S. (2008). Financial management and cost accounting module. Honors Programme in Public & Development Management. Stellenbosch: School of Public Management and Planning, University of Stellenbosch.

Fischer and Montagne ( 2009). “Understanding the financial crisis in Asia”, Pacific-Basin Finance Journal, Vol. 8, pp. 135–152.

Form D. (2005). Capital Expenditures and the Budget. Technical Notes and Manuals

Frank, K Reilly and keith C. Brown: investment analysis and portfolio management

Henschel J. (2008).  “Improving organizational performance through the use of effective elements of organizational structure”, International Journal of Health Care Quality Assurance incorporating Leadership in Health Services, Vol. 15(3), pp. xii-xxi

Jack D Glen (1953) H street, NW, Washington international finance cooperation discussion paper 17

Liekweg and Weber (2000), “A business approach to effective information technology risk analysis and management”, Information Management & Computer.

Meredith ( 2004). “Effective risk management in financial institutions: the Turnbull approach”, Balance Sheet, Vol. 9(3), pp. 24-7.

Nassaver Frank and Pausenberger Ehrenfied (1964) Risk management. Parker and Torres (1994) Kenya result of 1993.

Rasik (2002). The Impact of Enterprise Resource Planning (ERP) Systems on the Effectiveness of Internal Controls over Financial Reporting.

Rejda P. (2003). Study of Measures Used to Address Weaknesses in Public Financial Management Systems in the Context of Policy-based Support.

Retzlaff. K (2007).Risk Management, Andersen T.J. (ed.), Perspectives on Strategic Risk Management: 27-46. Denmark: Copenhagen Business School Press.

Schonborn J. (2010). Financial management and real options. Chichester, England: Wiley.

Security, Vol. 4(1), pp. 19–31

Stroeder M. (2008). How Far Have Public Financial Management Reforms Come in Africa? Faculty Research Working Paper. Cambridge, MA: Harvard Kennedy School.

The staff of the international bank for re construction and development / international monetary fund (2005) Financial sector assessment handbook.

Wesel (2010). Assessing and Reforming Public Financial Management: A New Approach. Washington, DC: World Bank.

APPENDICES

Appendix 1: Self-administered questionnaire

(A) Introduction

I am SSEMANDA   DAN a student of Kyambogo University, carrying out a study about risk management and performance of multinational companies like Barclays Bank. The purpose of this study is to identify the causes of risks that shall be faced by the multinational companies  like Barclays Bank  in Kampala, Uganda and how these as a result affect their performance. You’re kindly requested to answer this questionnaire briefly; the information will be treated confidential for academic purposes.

(B) RESPONDENTS BIO-DATA

Please tick in the appropriates box

SECTION: A

1: Gender:

Male                                                       Female

2: Age group:

Below 25 years                                  26 – 30 years                                        31-35 years

Above 36 years

3: Highest Level of Education qualification attained

Primary                        Secondary                      Diploma                                   Degree

Other (please specify) …………………………………

4: What position are you holding in the Bank?

Manager                                  Accountant

Other (please specify) …………………………………

5: How long have you worked for this Bank?

Below 1year                            1-2years                      3-5 years

6 and above

6: Does risk management affect the performance of the Bank?

Yes                                   No

SECTION: B

 (C) AN EVALUATION OF THE COMMON RISKS MULTINATIONAL COMPANIES LIKE BARCLAYS BANK FACE.

The respondent was expected to show the extent to which he\she agrees or disagrees on matters relating to what of kind of risk does his/her company face. (Please tick most appropriate of: strongly disagree=1, Disagree=2, Not sure=3, Agree=4 and strongly agree =5)

SECTION: C

(E) AN EVALUATION OF THE RELATIONSHIP BETWEEN RISK MANAGEMENT AND PERFORMANCE OF MULTINATIONAL COMPANIES LIKE BARCLAYS BANK IN KAMPALA, UGANDA.

The statements here below helped in assessing the relationship between risk management and performance of multinational companies. (Please tick most appropriate of: strongly disagree=1, Disagree=2, Not sure=3, Agree=4 and strongly agree =5

SECTION: D

(D)  AN EVALUATION OF THE IMPACT OF RISK ON PERFORMANCE OF MULTINATIONAL COMPANIES BARClAYS BANK IN KAMPALA,  UGANDA.

The respondent was expected to show the extent to which he/she agrees or disagrees on matters relating to the impact of risk on performance of multinational companies in Uganda. (Please tick most appropriate of: strongly disagree=1, Disagree=2, Not sure=3, Agree=4 and strongly agree =5)

Thanks for the cooperation.