Risk Management and Financial Performance in a Public Sector Context: A case of Ministry of Finance, Planning and Economic Development, Uganda

Abstract

Financial performance remains at the forefront of maintaining efficient and vibrant public institutions. In pursuit of financial performance goals, risk management has taken center stage in many organizations. This article assesses the risk management process and analyzes its effect on financial performance at the Ministry of Finance Planning and Economic Development (MOFPED) of Uganda. The article leverages on empirical evidence generated from staff employed in risk management and financial performance at the MOFPED. The respondents included 83 randomly selected staff and 7 key informants. Content analysis was used to assess the risk management process while correlation analysis was used to determine the significance of risk management to financial performance. Results established a significant positive relationship between risk identification, risk assessment and risk control on financial performance. Notably, qualitative findings provide insights into the weaknesses in risk management. Specifically, risk conception was observed to often not take into account all possible risks. In addition, the root cause analysis often did not take into account a wider operations environment. Risk assessment faced a critical gap of inability to thoroughly assess risk occurrence and inability to regularly back-up application risk track programs. The underlying reasons for the gaps identified include; limited staff motivation and commitment, limited time and technical skills to undertake thorough information search and comprehensive risk analysis as well as inaccessibility of adequate and accurate information. The article provides recommendations for strengthening risk management.