An Assessment of Risk Management Towards Effectiveness of Internal Control System of Banking Institute in Tanzania

Risk management is a practice intended to identify potential events that may affect the entity, and manage risk so as to achieve entity objectives. However, organization performances depending on effectiveness of internal control system of organization. The main objective of the study was to assess the risk management towards effectiveness of internal control system using a case study of CRDB Bank Plc Morogoro. The major issue that gave rise and prompted the researcher to study across this area was internal control ineffectiveness among the banking institutes, and that allowed huge financial losses to these banks. The study used a case study approach by studying the particular unit intensively. Data was collected using questionnaires, observation and interviews. The collected data was analyzed using descriptive statistics using Microsoft office excel and presented through percentages and frequencies. The findings were presented in form of frequency tables and figures. A target population of 45 was used from which a sample size of 40 participants was selected using probability and purposive sampling techniques. Key findings of study shows that risk management promote effectiveness of internal control system. 75% questionnaire response rate agreed that risk management promotes organizational control system and 100% interviews response rate agreeing as well. The findings confirmed that Procedure for developing risk assessment criteria, procedure for assessing the risk, Risk prioritization procedure, Action over risk enhances internal control effectiveness. Thus this research provides valuable information to the organization on ways to promote internal control effectiveness so that they organization triumphs. Also it provides valuable information to other financial institution on ways to ensure internal control effectiveness is used to ensure the long survival of their organizations. The study recommended that banking institute internal audit function should try to use Basel III guidance as a tool to see how other internal audit function in their sector are operating and they adopt those good practices to improve their own performance.