Assessing Risk Management Practices and Its Effect on Financial Sustainability: The Case of World Vision
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Date
2023-07
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Addis Ababa University
Abstract
Effective risk management practices are crucial for all organizations, as the primary objective of management is to maximize potential gains while factoring in potential volatility. In order for an organization to maintain sustainability, it is imperative to comprehend the link between financial sustainability and risk management practices, as the longevity and functioning of the organization depend on it. The objective of this research is to evaluate the risk management practices employed by World Vision Ethiopia, international CSO and their impact on its financial sustainability. A semi-structured questionnaire was distributed to 30 participants, and 27 responses were obtained. Additionally, two senior members of the project and organization were interviewed in detail. The collected data was analyzed using SPSS. Descriptive data analysis, including frequency, mean, standard deviation, and percentage calculations were conducted. The Relative Index analysis was also employed to explore the relationship between financial sustainability and risk management practices. The results showed that careful planning is crucial for effective risk management, and all participants demonstrated knowledge of risk management practices. Security risks were identified as the most significant concern for the project, with document review, expert judgment, and checklist analysis being the most commonly used techniques for identifying risks. Risk probability and impact assessment was the primary tool used for risk analysis. The study found that risk management practices significantly impact financial sustainability, with organizations relying on various risk detection tools, internal and external audits, technology, and top management support. Implementation of enterprise risk management has aided in detecting fraud and ensuring compliance with regulations. Therefore, it is recommended that World Vision Ethiopia prioritize risk planning and operational risk management, involve all stakeholders in risk identification, develop fallback plans, and evaluate risk management effectiveness, and increase awareness and expertise in financial risk management. The study provides direction for future research
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Keywords
Project Risk Management, Financial sustainability