Journal of Primeasia
Integrative Disciplinary Research | Online ISSN 3064-9870 | Print ISSN 3069-4353
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Articles
Volume 1 Number 3 2020
RESEARCH ARTICLE (Open Access)
Exploring Financial Risk Management Approaches, Challenges, and Their Effects on Organizational Performance Outcomes
Md. Rezaul Haque1*, Proggo Choudhury2
Journal of Primeasia 1 (3) 1-7 https://doi.org/10.25163/primeasia.1110486
Submitted: 03 January 2020 Revised: 01 March 2020 Accepted: 05 March 2020 Published: 07 March 2020
Abstract
Background: Financial risk management (FRM) operates as an essential organizational system which helps businesses handle monetary risks to achieve superior operational outcomes. Organizations in Bangladesh must use FRM systems to succeed because they operate in a business environment that keeps changing through market fluctuations and regulatory modifications and technological progress.
Methods: The study team conducted a questionnaire-based survey to gather data from 225 professionals who worked in financial and manufacturing and service industries throughout Bangladesh. The study team used descriptive statistics and correlation (r) and significance (p) and chi-square (χ²) tests to analyze data for evaluating FRM practices and organizational performance relationships and their related challenges.
Results: The analysis shows that organizations primarily use three FRM practices which include credit risk assessment and operational risk control and portfolio diversification. Correlation analysis revealed significant positive correlations between FRM adoption and performance results (r = 0.66–0.71, p = 0.01), whereas FRM adoption showed a negative relationship with challenges (r = -0.54, p = 0.01). The Chi-square analysis showed significant relationships between the variables (χ² = 28.56–48.25, p = 0.05). The FRM system helped operational efficiency by 25% and decision-making power by 20% and profitability by 22% but operational problems decreased performance between 12 and 20 percent.
Conclusion: Organizations in Bangladesh complete better performance results through practical implementation of FRM systems which centrals to improved effective efficiency and higher profitability.
Keywords: Financial Risk Management (FRM), Challenges, Profitability, Efficiency, Organizational Performance
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