Managerial risk aversion in the banking context of South Africa

Abstract

This research posed four propositions concerning bank managers and risk aversion. The first one was that managers are risk averse, the second one was that managers from different banks would have similar profiles, the third one was that a manager with a risk appetite will not be placed in a position in where they influence bank policies and the last proposition was that every manager will have a unique perception of a person as having a high risk profile. Firstly it was found that the participating managers had high risk profiles, the second and third proposition remained inconclusive and the last proposition was confirmed, risk is defined subjectively. The most interesting insight was that the managers’ high risk profile. This was a counter intuitive realisation, because due to the current turbulent economic times, one would have speculated that managers would become more risk averse. The research was exploratory and the aim was not to explain causal relationships. Instead, the aim was to lay the foundation for further research on the relationship between risk profile and organisational results. For business it is recommended that banks try to reframe their perception of risk, in order to penetrate new market segments.