Comparative Analysis on Risk Management Practices among Selected Cooperative Banks and Rural Banks in Cagayan

Abstract

This descriptive study aimed to conduct a comparative analysis on the
Risk Management Practices of selected Cooperative Banks and Rural Banks
operating in Cagayan. Cooperative Banks and Rural Banks are small banks
that are susceptible to the greater amount of risks. Administration of
questionnaires and conduct of interviews were the data gathering
methods used. The study participants were bank managers, head of risk
management department and any person who have direct knowledge of
risk management of the banks where they are employed. Frequency Count
and Percentage, Weighted Mean and Kruskal–Wallis Test were utilized as
data analysis. From the findings, results revealed that majority of the banks
are Rural Banks. In addition, majority of the banks are dominated by vast
regional banks in the market coverage. Cooperative banks in Cagayan have
a “very high” understanding of risk and risk management, while rural banks
have a “good level” of understanding. Audit and physical inspection were
the highest risk identification method used for cooperative and rural banks.
Among the banks common risk management practices involved, namely;
managing risk; risk assessment and analysis; and risk management process.
Kruskal-Wallis test showed no significant difference on the level of
understanding of the participants on risk management when grouped
according to profile. Moreover, Kruskal-Wallis test revealed no significant
difference in the risk management practices of banks. Thus, Banks
in Cagayan whether Rural or Cooperative in nature utilizes risk
identification methods. Both Cooperative Banks and Rural Banks find it
difficult to identify and classify its main risk.