The Effect of Operational Risk Management (ORM) On The Financial Performance (FP) Of Iraqi Commercial Banks

Abstract

A major concern for banking management was the increase in bank losses due to insufficient operational risk management and adverse repercussions on banks' financial performance.

Hence, the purpose of the study to determine the effect of operational risk management on financial performance in commercial banks in Iraq.

 A quantitative approach is used to obtain data from a survey (questionnaire) consisting of 30 items with a five-point Likert scale. A total of 126 managers participated from the commercial banks in the Iraqi banking sector in the study. Smart PLS 3.2.9 was used for data processing.

The empirical findings show that operational risk management is positively and significantly related to financial performance. The results support the hypothesis that operational risk management has a significant impact on the financial performance of commercial banks in Iraq.

This study recommends the banks should tighten its operational risk management systems in order to continue improving its financial performance. The Iraqi commercial banks should regularly study and assess their opportunities to achieve their financial objectives.

The study is based on a limited scope; therefore, larger sample size may make for interesting research in the future.