Enterprise Risk Management Value to Banking Sector of Zimbabwe - Assignment Example

The Government of Zimbabwe has often been found to make the drought or the macroeconomic factors responsible for the liquidity crisis. According to the Reserve Bank, the main causes that triggered the solvency and liquidity crisis were poor corporate governance, inadequate risk management, rapid expansion, overstatement of capital, creative accounting, speculative trades, high level of non-performing assets, and unsustainable earnings.  

At the beginning of the year 2009, the multi-currency system was adopted by the Government of Zimbabwe that preferred the Pound, US$, and Rand as means of transaction by business entities and the public.

This was mainly because the local currencies had become almost useless since the year 2008. The gradual shift from local currencies to convertible currencies brought more stability in business with the financial statements and budgeting. But these changes have also been found to create severe implications in the field of accounting. The most important business implication is the conversion of the Zimbabwean Dollar into US$. These challenges of the opening of the economy for trading in convertible currencies would require the adoption of global accounting standards such as the need of consulting IFRS or IAS.

Another issue including revenue recognition and measurement, financial instruments, and impairment of assets makes the business enterprises vulnerable to significant risk. The concept of Enterprise Risk Management and its value addition will help the researcher to reveal why and how much important is evaluation of Enterprise Risk Management value is to the banking sector of Zimbabwe in today’s competitive and globalized markets. The purpose of the study will be an evaluation of Enterprise Risk Management value to the banking sector of Zimbabwe which can be achieved by conducting online-biassed questionnaires and interviews through video calls in case the face-to-face interview is not possible.

The researcher may choose appropriate representatives of sample companies and hence conduct the interviews. The most desirable target interviewee is probably the senior management of the sample companies representing the banking sector of Zimbabwe. This is because all strategic decisions are implemented at the top level of management. The three basic reasons for which the study topic can be considered important are as follows: The concept of traditional risk management has evolved over the years and every academician and professional must be acquainted with the current changes that are applicable The multi-currency system of Zimbabwe and implications in the banking sector after adapting convertible currency for business transactions The impact of a gradual shift from local currency to globally convertible currencies in the banking sector of Zimbabwe The study will help the researcher to address all the motivating factors listed above that created an interest for the research.