Banking must be rooted in risk management and ethics

Published in Business and Finance on Tuesday, August 5th 2025 at 14:59 GMT by Ghanaweb.com
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The Chief Executive Officer of the Chartered Institute of Bankers (CIB) Ghana, Robert Dzato, is calling for a stronger foundation in risk management, ethical behavior, and professional competence to help drive Ghana's banking sector forward.

Banking in Ghana: A Call for Risk Management and Ethical Foundations

The Chartered Institute of Bankers (CIB) Ghana has issued a strong call for a renewed focus on risk management and ethical conduct within the Ghanaian banking sector, emphasizing that these elements are not merely supplementary but foundational to sustainable growth and public trust. The statement, delivered during a recent event marking World Investor Week, highlights concerns about recent instability in the financial landscape and underscores the critical need for banks to prioritize responsible practices.

The core message revolves around the idea that robust risk management isn't simply about complying with regulations; it’s an intrinsic part of sound banking operations. The CIB argues that a culture of proactive risk assessment, mitigation, and monitoring is essential to prevent failures and safeguard depositors' funds. This includes not only traditional credit risk – assessing the likelihood of borrowers defaulting on loans – but also encompassing operational risks (failures in internal processes), market risks (fluctuations in interest rates or exchange rates), liquidity risks (inability to meet short-term obligations), and increasingly, cybersecurity risks.

The recent challenges faced by some Ghanaian banks, including collapses and restructuring exercises, have served as stark reminders of the consequences of inadequate risk management practices. The CIB implicitly acknowledges these past failures while advocating for a forward-looking approach that prevents recurrence. They stress that banks must move beyond reactive measures and embed risk management into their DNA – from initial loan approvals to ongoing portfolio monitoring. This requires investment in skilled personnel, advanced technology, and robust internal controls.

However, the emphasis on ethics is equally crucial. The CIB recognizes that even with impeccable risk management frameworks, unethical behavior can undermine stability and erode public confidence. They argue that a strong ethical foundation fosters transparency, accountability, and fairness in all banking operations. This includes preventing fraudulent activities, ensuring fair treatment of customers, and upholding the integrity of financial markets.

The institute believes that fostering an ethical culture requires more than just codes of conduct; it demands leadership commitment, employee training, and robust whistleblowing mechanisms. Leaders must set a clear example of ethical behavior, while employees need to be equipped with the knowledge and tools to identify and report unethical practices without fear of reprisal. Whistleblower protection is highlighted as particularly important – encouraging individuals within banks to raise concerns about potential wrongdoing internally before it escalates into larger systemic issues.

The CIB’s call extends beyond individual banks to encompass the broader regulatory environment. They suggest that regulators must continue to strengthen oversight and enforcement, ensuring that banks adhere to both risk management guidelines and ethical standards. This includes regular stress testing of bank balance sheets, rigorous examination of internal controls, and swift action against institutions found to be in violation of regulations. The institute also advocates for continuous professional development for banking professionals, emphasizing the need for ongoing training on emerging risks and ethical considerations.

Furthermore, the CIB recognizes that public awareness plays a vital role in promoting financial stability. Educating investors and depositors about their rights and responsibilities is crucial to fostering trust and encouraging responsible investment decisions. A financially literate population is better equipped to assess risk, understand banking products, and hold institutions accountable for their actions.

The institute's statement also implicitly acknowledges the evolving nature of the banking sector, driven by technological advancements like digital banking and fintech innovations. These developments bring new opportunities but also introduce novel risks that require careful management. Cybersecurity threats are specifically mentioned as a growing concern, requiring banks to invest in robust security measures to protect customer data and prevent financial losses. The CIB likely intends for this call to action to encompass the ethical considerations surrounding these technological advancements – ensuring fairness, transparency, and consumer protection within digital banking platforms.

Ultimately, the Chartered Institute of Bankers Ghana’s message is a plea for a return to fundamental principles in the banking sector: prioritizing risk management as an integral part of operations and cultivating a culture of unwavering ethics. They believe that by embracing these values, Ghanaian banks can build resilience, maintain public trust, and contribute to sustainable economic growth. The call isn't just about preventing future crises; it’s about building a stronger, more responsible, and trustworthy banking sector for the benefit of all stakeholders – depositors, investors, and the nation as a whole.

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[ https://www.ghanaweb.com/GhanaHomePage/business/Banking-must-be-rooted-in-risk-management-and-ethics-CIB-Ghana-1994814 ]