Limited risk management structures and process in financial institutions expose institutions to external shocks that limit their profitability and success. Emergence of fintech companies, technological innovation, dynamic macroeconomic environment, constant changes in customer needs and preferences and the changes in financial regulation are some of the factors that increase risk and uncertainty in financial institutions.
Risk management involves understanding, analysing and addressing risk to ensure that financial institutions achieve their short term and strategic goals and objectives. Successful financial institutions have a well-defined and articulated risk management strategy, personnel and are deliberate about mitigating different types of risks.
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