Abstract
The banking industry in South Africa is facing three main challenges, namely:
continuous change, foreign competition, and increasing levels of risk. These
problems flow mainly from cultural diversity, globalisation, and rapid
technological development in systems and communication. Decreasing
predictability stems to a great extent from a lack of foreknowledge of how
globalisation will develop, and how it can influence the South African banking
industry in general and holistic risk management (HRM) in particular.
Management of the South African banking industry therefore need to rely on
crucial intelligence and foreknowledge concerning events, trends and
development of (HRM) that affect the profitability and future strategic viability of
the whole South African banking industry.
At the onset various concepts and processes were emphasised in this study,
namely operational risk management, strategic risk management, the risk
management culture in the banking industry, the role of risk management in the
banking industry, the role of risk management process in the banking industry,
corporate governance in the banking industry in South Africa. However, the main
purpose of this study was to explore the need and the dynamics of managing risk
in the banking industry in a holistic manner. To this end the development of, and
trends in (HRM) as part of good corporate governance in the banking industry
were researched and documented.
The practical aspect of the study was firstly based on the definition and analysis
of different categories of risk in the banking industry. The definition and analysis
was done in order to cover a broader range of risks the banking industry is
facing. Secondly the risk management culture in the banking industry was
investigated. Thirdly the role of risk management in the banking industry was
explored in detail. Fourthly the risk management process in the banking industry
was investigated and explained. Fifthly the link between risk management and
corporate governance was explored. Sixthly models developed by Kloman
(2000), Lam (2003) and Regester and Larkin (2005) were used as a benchmark
to develop a framework for the management of holistic risk in the banking
industry.
It was concluded that in view of the need in the South African banking industry
for a structured means of managing risk holistically, and in view of HRM
constituting such a process, there is relevance for the implementation of HRM in
the four big banks of the South African banking industry. However, small and
unlisted banks do not manage HRM as suggested by the HRM framework. In this
regard a number of recommendations were made with respect to managing HRM
proactively. A framework based on empirical research and earlier work by
Kloman (2000), Lam (2003) and Regester and Larkin (2005) was furthermore
suggested for the implementation of HRM in the South African banking industry
in the belief that this framework, and the overall research reported in this study
could be of theoretical as well as practical value for risk managers in the South
African banking industry.
Dr. D. J. Theron (UJ)
Dr. T. P. v/d Walt (ABSA)