RISK MANAGEMENT ON THE PROFITABILITY OF FINANCIAL INSTITUTIONS;

A CASE OF STANBIC BANK UGANDA.

BY

TUSIIME JUDITH

07/U/15660/EXT

SUPERVISOR:

MR NZIBONERA ERIC

A RESEARCH REPORT SUBMIITED IN PARTIAL FULFILLMENT OF THE

REQUIREMENTS FOR THE AWARD OF A BACHELORS DEGREE IN COMMERCE

OF MAKERERE UNIVERSITY

JUNE 2011

ii

DECLARATION

I, hereby declare that this research report is my own work and has not been produced by any

previous researcher for any academic purposes.

TUSIIME JUDITH

Date………………………………………………Signature……………………………….

i

APPROVAL

This work has been submitted with my approval as a University Supervisor

SIGNITURE………………………………

MR. NZIBONERA ERIC

DATE…………………………………..

ii

DEDICATION

This dissertation is dedicated to my Father Arinaitwe Emmanuel who has frequently told me as a

growing woman that “with hard work you can accomplish anything and become what you

desire.”

Also, I dedicate this work to my Mother Nkundeki Jesca. Her word of encouragement and

prayers has remained lingering in my mind and has helped me succeed. I also dedicate this work

to my friends Pastor Alex, Sarah, Dorothy, Deo, Godwin, Palmer and Allen who were there for

me encouraging me when things were tough, I say this, “God is able”.

Also to my beloved Brothers Alex Nelson and Derrick of which their words of encouragement

and support kept me strong all through, thank you indeed. Lastly to my dear Sisters Stella,

Victor, Mercy, Juliana, Cindy God bless you all.

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ACKNOWLEDGEMENT

My first appreciation and thanks go to the Almighty God who has given me the life and strength

to accomplish this academic work. With special thanks, I would like to extend my appreciation

to my Supervisor Mr. Nzibonera Eric for giving me his valuable time and technical guidance

while working on the document. To all who stood by me and supported me during my studies,

God bless you all.

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TABLE OF CONTENTS PAGE

DECLARATION..............................................................................................................................iAPPROVAL....................................................................................................................................iiDEDICATION...............................................................................................................................iiiACKNOWLEDGEMENT..............................................................................................................ivABSTRACT.................................................................................................................................viiiCHAPTER ONE..............................................................................................................................1GENERAL INTRODUCTION.......................................................................................................11.0 Introduction................................................................................................................................11.1 Background of the study............................................................................................................11.2 Problem statement.....................................................................................................................31.3 Purpose of the study...................................................................................................................41.4 Objectives of the study..............................................................................................................41.5 Research questions.....................................................................................................................41.6 Scope of study............................................................................................................................41.7 Significance of study.................................................................................................................5CHAPTER TWO.............................................................................................................................6LITERATURE REVIEW................................................................................................................62.0 Introduction................................................................................................................................62.1 Risk management defined..........................................................................................................62.3 Risk management techniques....................................................................................................72.4 Profitability indicators in a bank................................................................................................92.5 Relationship between risk management and profitability.......................................................13CHAPTER THREE.......................................................................................................................17METHODOLOGY........................................................................................................................17

3.0 Introduction..........................................................................................................................173.1 Research design...................................................................................................................173.2 Population............................................................................................................................173.3 Sample size..........................................................................................................................173.4 Sampling procedure.............................................................................................................183.5 Research Instruments...........................................................................................................183.5 Data sources.........................................................................................................................183.6 Data presentation and analysis.............................................................................................193.7 Procedure.............................................................................................................................19

4.2 Techniques of risk management in Stanbic bank-Wandegeya branch....................................224.3 Indicators of profitability in Stanbic bank...............................................................................254.4 Risk management and profitability in Stanbic bank................................................................285.4 Relationship between risk management and profitability in Stanbic bank-Wandegeya branch........................................................................................................................................................29CHAPTER FIVE...........................................................................................................................32

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SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATIONS..........................325.1 Introduction..............................................................................................................................325.2 Risk management techniques..................................................................................................325.3 Profitability indicators.............................................................................................................325.4 Relationship between risk management and profitability in Stanbic bank-Wandegeya branch........................................................................................................................................................335.5 Conclusion...............................................................................................................................335.6 Recommendations....................................................................................................................34REFERENCES..............................................................................................................................35QUESTIONNAIRE.......................................................................................................................37INTRODUTORY LETTER………………………………….…………………………………..38

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LIST OF TABLES

Table 1: Category of respondents..................................................................................................17

Table 2: Sex of respondent............................................................................................................20

Table 3: Age of respondent............................................................................................................20

Table 4: Marital status...................................................................................................................21

Table 5: Level of qualification......................................................................................................21

Table 6: Experience of the employee in Stanbic bank..................................................................22

Table 7: Rating the risk management in stanbic bank...................................................................22

Table 8: Techniques of risk management used in the bank...........................................................23

Table 9: Rating the level of profitability in the stanbic bank........................................................25

Table 10: Stanbic bank experiencing increased profitability........................................................25

Table 11: Reporting revenue in Stanbic bank................................................................................25

Table 12: Indicators of profitability in Stanbic bank.....................................................................26

Table 13: Relationship between risk management and profitability in Stanbic bank...................28

Table 14: Correlation analysis showing the relationship between the risk management and

profitability in Stanbic bank..........................................................................................................31

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ABSTRACT

The purpose of the study was to establish the effect of risk management on profitability in

Stanbic bank-Wandegeya branch and the objectives were to evaluate the techniques of risk

management used in financial institutions, to establish the profitability indicators of financial

institutions and to establish the relationship between risk management and profitability in

financial institutions.

This study was a case study design. Case studies have the advantage of providing manageable

study area which is representative of other similar areas. The researcher employed both

quantitative and qualitative research methods. The population was 77 employees who are both

staff and administrators and a sample was 60 respondents who were selected through simple and

purposive sampling techniques. A questionnaire is a series of questions asked to individuals to

obtain statistically useful information about a given topic. Data from the field was sorted, coded

and entered in Statistical Package for Social Scientists (SPSS) which was used to establish the

relationship between risk management and profitability. Data from questionnaires was presented

in form of frequency tables, pie charts and bar graphs.

Basing on the study findings therefore, it is evident that risk management is positively related

with the level of profitability in Stanbic bank. This is so because most of the statements

regarding the effect of risk management on profitability were scored positively by the

participants in the study. The researcher recommended that banks need to always identify their

legal risk profile and target these hot spots earlier not to be caught off guard. Determining the

legal risk profile allows your company to target training and cultivate legal literacy where it is

needed most.  It helps you create a prioritized agenda. If risks are improperly assessed and

prioritized, time can be wasted in dealing with risk of losses that are not likely to occur. There is

need to employ enterprise risk management in banks because risks are possible events or

circumstances that can have negative influences on the enterprise in question.

viii

CHAPTER ONE

GENERAL INTRODUCTION

1.0 Introduction

This chapter gives the details of the background, problem statement, purpose, objectives,

research questions, significance and the scope of the study.

1.1 Background of the study

Risk management is simply a practice of systematically selecting cost effective approaches for

minimising the effect of threat realisation to the organisation. All risks can be never fully

avoided or mitigated simply because of financial and practical limitations (Moteff John, 2005).

According to Hubbard (2009), risk management is defined as the identification, assessment, and

prioritization of risks followed by coordinated and economical application of resources to

minimize, monitor, and control the probability and/or impact of unfortunate events or to

maximize the realization of opportunities Risks can come from uncertainty in financial markets,

project failures, legal liabilities, credit risk, accidents, natural causes and disasters as well as

deliberate attacks from an adversary. The strategies to manage risk include transferring the risk

to another party, avoiding the risk, reducing the negative effect of the risk, and accepting some or

all of the consequences of a particular risk.

The risk management plan should propose applicable and effective security controls for

managing risks. A good risk management plan should contain a schedule for control

implementation and responsible persons for those actions (Edward, 2005) and should also select

appropriate controls or countermeasures to measure each risk. Risk mitigation needs to be

1

approved by the appropriate level of management in order to increase profitability in a company.

For example, a risk concerning the image of the organization should have top management

decision behind.

Profitability refers to the positive gain from an investment or business operation after

subtracting for all expenses opposite of loss (Proimos, 2009). Profitability on a company is the

difference between the income of the business and all its costs/expenses. A business that does not

make profits will fail, potentially affecting employees, suppliers and the local community

because their overall operations depend on profits.

Profitability is the measure of the overall success of a company. It is a necessary coordination for

survival. Investors could prefer a single measure of profitability that would be meaningful in all

situations. Test of profitability focuses on measuring the adequacy if income by comparing it

with one or more primary activity that are measured in the financial statements (Sheffrin, 2003).

Effective risk management system will minimize the complexities involved in planning,

executing and controlling overall running of a business which is critical to success and this

maximizes profitability in a business. A customer is happy and secure when he/she invests in a

risk free business and wants to be equally happy on each further occasion.Therefore, risk

management and profitability are closely related aspects and need to be handled with extra

emphasis if a business is to hit high profitability over a given period of time.

2

1.2 Problem statement

Financial institutions while undertaking risk management, prioritization process is followed

whereby the risks with the greatest loss and the greatest probability of occurring are handled

first, and risks with lower probability of occurrence and lower loss are handled in descending

order

However despite all this low profitability levels have been reported in some of commercial

banks. For example in the case of Stanbic bank-Wandegeya branch through the application of

approaches like risk reduction, risk avoidance, risk sharing and risk retention to manage risks,

low profitability has levels have been realized Stanbic bank registered 4% drop in making profit

to Shs. 44.7b in the first half of 2010 cmpared to Shs. 46.8b in June 2009 (unaudited financial

statement 2010). This decline was attributed to lower interest income, poor risk management and

the substantial decrease in yields on treasury bills had a negative impact on profitability (report

by Phillip Odera, The managing director 2010) which could affect the going concern of the

business. Its however for that reason which has prompted the researcher to find out whether the

low profitability levels are due to inappropriate risk management techniques.

3

1.3 Purpose of the study

The purpose of the study was to establish the effect of risk management on profitability in

Stanbic bank-Wandegeya branch.

1.4 Objectives of the studyi. To evaluate the techniques of risk management used in financial institutions.

ii. To establish the profitability indicators of financial institutions.

iii. To establish the relationship between risk management and profitability in financial

institutions.

1.5 Research questionsi. What techniques of risk management are used in financial institutions?

ii. What are the indicators of profitability in financial institutions?

iii. What is the relationship between risk management and profitability in financial

institutions?

1.6 Scope of study

Geographical scope

The study was carried out in Stanbic bank Wandegeya branch. The bank is located 4 kilometres

from Kampala city along Bombo road.

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Subject scope

The study specifically focused on different risk management technique and different aspects of

profitability that is the revenues earned and the expenses incurred in Stanbic bank –Wandegeya

branch.

Time scope

The study took a period from 2005 to 2010 to act as the reference years the purposes of this

study.

1.7 Significance of studyi. The study may be of help to the management of stanbic bank on how to carry out risk

management in their business in order to reduce losses and increase profitability.

ii. The study may also act as a source of literature for other scholars who intend to carry out

further research on the effect of risk management on profitability of businesses with

specific reference to banking institutions.

iii. The study may also enable the researcher to fulfill one of the requirements for the award

of the Bachelors degree in Commerce of Makerere University.

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CHAPTER TWO

LITERATURE REVIEW

2.0 IntroductionThis chapter presents what other scholars have written about risk management in relation to

profitability of an organization and it is arranged in accordance to the objectives of the study.

2.1 Risk management defined

Risk is defined as the effect of uncertainty on objectives (whether positive or negative). Risk

management is thus considered the identification, assessment, and prioritization of risks followed

by strict coordinated and economical application of resources to minimize, monitor, and control

the probability of unfortunate events and maximize the realization of opportunities. Risks can

come from uncertainty in financial markets, project failures, legal liabilities, credit risk,

accidents, natural causes and disasters as well as deliberate attacks from an adversary (Hubbard

Douglas, 2009).

According to Mesler (2004), risk management is simply a practice of systematically selecting

cost effective approaches for minimizing the effect of threat realization to the organization and

all risks can never be fully avoided or mitigated simply because of financial and practical

limitations. Therefore all organizations have to accept some level of residual risks. Financial risk

management is the practice of creating economic value in a firm by using financial instruments

to manage exposure to risk, particularly credit risk and market risk. Financial risk management

requires identifying its sources, measuring it, and plans to address them. Financial risk

management can be qualitative and quantitative. As a specialization of risk management,

financial risk management focuses on when and how to hedge using financial instruments to

manage costly exposures to risk.

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2.3 Risk management techniques

Risk avoidance

If a company wants to effectively manage risks, there is need to engage in programs of risk

avoidance.  The use of risk avoidance sounds obvious but most companies which fail to identify

risky areas in their business in order to avoid risks associated with those areas fail to manage

their risks but those which ably identify where risks are in the company, risk management can be

effectively done (Deventer & Donald, 2004).

Risk reduction/optimization

Tapiero (2004) notes that risk reduction or optimization involves reducing the severity of the loss

or the likelihood of the loss from occurring. Acknowledging that risks can be positive or

negative, optimizing risks means finding a balance between negative risk and the benefit of the

operation or activity; and between risk reduction and effort applied. Risk management through

optimization can optimize risk to achieve levels of residual risk that are tolerable (Roehrig,

2006).

Use of Modern software development methodologies

Modern software development methodologies reduce risk by developing and delivering software

incrementally. Early methodologies suffered from the fact that they only delivered software in

the final phase of development; any problems encountered in earlier phases meant costly rework

and often jeopardized the whole project. By developing iterations, software projects can limit

effort wasted to a single iteration.

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Outsourcing to manage risks

According to Frederick (1999), outsourcing could be an example of risk reduction if the

outsourcer can demonstrate higher capability at managing or reducing risks. For example, a

company may outsource only its software development, the manufacturing of hard goods or

customer support needs to another company, while handling the business management itself.

This way, the company can concentrate more on business development without having to worry

as much about the manufacturing process, managing the development team, or finding a physical

location for a call center.

Risk transfer

The term of 'risk transfer' is often used in place of risk sharing in the mistaken belief that you can

transfer a risk to a third party through insurance or outsourcing. In practice if the insurance

company or contractor go bankrupt or end up in court, the original risk is likely to still revert to

the first party. As such in the terminology of practitioners and scholars alike, the purchase of an

insurance contract is often described as a "transfer of risk." However, technically speaking, the

buyer of the contract generally retains legal responsibility for the losses "transferred", meaning

that insurance may be described more accurately as a post-event compensatory mechanism. For

example, a personal injuries insurance policy does not transfer the risk of a car accident to the

insurance company. The risk still lays with the policy holder namely the person who has been in

the accident. The insurance policy simply provides that if an accident (the event) occurs

involving the policy holder then some compensation may be payable to the policy holder that is

commensurate to the suffering/damage (Dorfman & Mark, 2007).

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Risk retention

According to Englewood Cliffs (2007), risk retention pools are technically retaining the risk for

the group, but spreading it over the whole group involves transfer among individual members of

the group. This is different from traditional insurance, in that no premium is exchanged between

members of the group up front, but instead losses are assessed to all members of the group.

Involves accepting the loss, or benefit of gain, from a risk when it occurs. True self insurance

falls in this category. Risk retention is a viable strategy for small risks where the cost of insuring

against the risk would be greater over time than the total losses sustained. All risks that are not

avoided or transferred are retained by default. This includes risks that are so large or catastrophic

that they either cannot be insured against or the premiums would be infeasible.

2.4 Profitability indicators in a bankAccording to Kaplan (2001), the profitability ratios are used to measure how well a business is

performing in terms of profit. The profitability ratios are considered to be the basic bank

financial ratios. In other words, the profitability ratios give the various scales to measure the

success of the firm. The profitability ratios can also be defined as the financial measurement that

evaluates the capacity of a business to produce yield against the expenses and costs of business

over a particular time period.

Profitability is the first concern of all businesses.  Profit and Loss risk management is at the

top of every executive's list.  Quality and compliance/legal liability risk management are

also important concerns.  No longer is it necessary to have separate, often conflicting and

expensive systems to meet these needs (Conroy, 2005).

9

Quite often a very small percentage of the firm’s best customers will account for a large

portion of firm profit. Although this is a natural consequence of variability in profitability

across customers, firms benefit from knowing exactly who the best customer are and how

much they contribute to firm profit. At the other end of the distribution, firms sometimes

find that their worst customers actually cost more to serve than the revenue they deliver.

These unprofitable customers actually detract from overall firm profitability. The firm

would be better off if they had never acquired these customers in the first place (Helgesen,

1999).

If a company is having a higher profitability ratio compared to its competitor, it can be inferred

that the company is doing better than that particular competitor. The higher or same profitability

ratio of a company compared to its previous period also indicates that the company is doing well.

The return on assets, profit margin and return on equity are the examples of profitability ratios.

Hence in order to judge the profitability of the retailer perfectly, the profit margin of the 4th

quarter of a retailer should be compared with the profit margin of the 4th quarter of the previous

year. Below are some of the profitability indicators in a company.

Operating profit margin

The operating profit margin gives the business owner a lot of important information about the

firm's profitability, particularly with regard to cost control. It shows how much cash is thrown off

after most of the expenses are met. A high operating profit margin means that the company has

good cost control and/or that sales are increasing faster than costs, which is the optimal situation

10

for the company. Operating profit will be a lot lower than the gross profit since selling,

administrative, and other expenses are included along with cost of goods sold.

Gross Profit Margin

It gives the value of gross profit earned by the company over sale. It also refers to a financial

metric used to assess a firm's financial health by revealing the proportion of money left over

from revenues after accounting for the cost of goods sold (Rosemary Peavler, 2001). Gross profit

margin serves as the source for paying additional expenses and future savings. The mathematical

formula for gross profit margin is:

Gross Profit Margin = (Total sales - Cost of sold goods)/ Sales

Return on Equity

Return on equity (ROE) measures the rate of return on the ownership interest (shareholders'

equity) of the common stock owners. It measures a firm's efficiency at generating profits from

every unit of shareholders' equity (also known as net assets or assets minus liabilities). ROE

shows how well a company uses investment funds to generate earnings growth. ROEs between

15% and 20% are considered desirable. The amount of net income returned as a percentage of

shareholders equity. Return on equity measures a corporation's profitability by revealing how

much profit a company generates with the money shareholders have invested.  

Return on Equity = Net Income/Shareholder's Equity

Net income is for the full fiscal year (before dividends paid to common stock holders but after

dividends to preferred stock.) Shareholder's equity does not include preferred shares.

11

Return on Assets

It tells how the assets of the firm are used most effectively to earn profit. Return on assets is an

indicator of how profitable a company is before leverage, and is compared with companies in the

same industry. Since the figure for total assets of the company depends on the carrying value of

the assets, some caution is required for companies whose carrying value may not correspond to

the actual market value.

Return on assets is a common figure used for comparing performance of financial institutions

(such as banks), because the majority of their assets will have a carrying value that is close to

their actual market value (Philip Kotler (2005). Return on assets is not useful for comparisons

between industries because of factors of scale and peculiar capital requirements (such as reserve

requirements in the insurance and banking industries). The mathematical formula for return on

assets is:

Return on Assets = Net Income / Total assets

Profitability can also be established depending on the costs of operation in a company.

While it is usually clear what revenue each customer generated, it is often not clear at all

what costs the firm incurred serving each customer. Activity based costing can sometimes

be used to help determine the costs associated with each customer or customer group. For

components of cost not directly related to serving customers, the calculation of customer

profit must use some method to fully allocate these costs to customers if the total of

customer profit is to match the operating profit of the firm. If the firm decides not to

12

allocate these non-customer costs to customers, then the sum of customer profit will be

greater than the operating profit of the firm (Kaplan, 2001).

2.5 Relationship between risk management and profitability

The investors’ ability to produce positive returns under unknown market conditions is the one

fundamental factor influencing future investment returns but this is made possible through proper

risk management. From that focus point, capital at risk, time, volatility, and cost relative to return

are 'unmistakably' defined and evaluated. Nothing else matters. The word 'unmistakably' is

essential because 'beliefs' that have no relevance to 'Truth' permeate traditional analytical

processes. Financial losses are inevitable unless 'risk management' and 'profitability' are unified

(Charles, 2004).

According to Lam & James ( 2003), if risks are improperly assessed and prioritized, time can be

wasted in dealing with risk of losses that are not likely to occur. Spending too much time

assessing and managing unlikely risks can divert resources that could be used more profitably.

Unlikely events do occur but if the risk is unlikely enough to occur it may be better to simply

retain the risk and deal with the result if the loss does in fact occur.

Erroneous risk management models currently 'believed' as 'Truth' used to determine investment

value may actually cause unwanted losses. We are talking about major issues on an enormous

scale. If we build reality by means of 'belief' being unified with 'Truth' or Universal laws (Eternal

Truth), risk is managed at the causal level. Thus erroneous risk management affects profitability

(Lam, 2003).

Improper risk assessment is one of the major factors identified as threatening company

performance and profitability.  Yet companies who prioritize their risk and put resources behind

13

managing the biggest threats experienced 20 percent higher revenue growth and up to 50 percent

higher earnings than their peers or competitors. That's compelling evidence.  Implementing

proper risk management therefore makes common sense as well as a ton of business sense (Lam

& James, 2003).

Organizations are studded with opportunities for small, highly targeted business changes that can

make a huge difference in managing legal risks that can escalate into expensive lawsuits.  The

challenge is finding them and determining which add the most value to your particular

organization (Jossey-Bass, 2006). Identifying your company's legal risk profile and target these

hot spots increases profitability in a company. Determining the legal risk profile allows your

company to target training and cultivate legal literacy where it is needed most.   It helps you

create a prioritized agenda.

Mark Mesler (2004) noted that risk management also faces difficulties allocating resources. This

is the idea of opportunity cost. Resources spent on risk management could have been spent on

more profitable activities. Again, ideal risk management minimizes spending and minimizes the

negative effects of risks. Legal audits offer a systematic way for companies to identify and

diagnose business hot spots.  The best audits also look below the surface and connect the dots

between hotspots and the business functions and decision makers who create them. The added

level of detail helps create a blue print for customization and a way to ignite profitability

Intangible risk management identifies a new type of a risk that has a 100% probability of

occurring but is ignored by the organization due to a lack of identification ability. For example,

when deficient knowledge is applied to a situation, a knowledge risk materializes. Relationship

risk appears when ineffective collaboration occurs. Process-engagement risk may be an issue

14

when ineffective operational procedures are applied. These risks directly reduce the productivity

of knowledge workers, decrease cost effectiveness, profitability, service, quality, reputation,

brand value, and earnings quality. Intangible risk management allows risk management to create

immediate value from the identification and reduction of risks that reduce productivity (van

Deventer, 2004).

According to Helgesen (1999), in enterprise risk management, a risk is defined as a possible

event or circumstance that can have negative influences on the enterprise in question. Its impact

can be on the very existence, the resources (human and capital), the products and services, or the

customers of the enterprise, as well as external impacts on society, markets, or the environment.

In a financial institution, enterprise risk management is normally thought of as the combination

of credit risk, interest rate risk or asset liability management, market risk, and operational risk. In

the more general case, every probable risk can have a pre-formulated plan to deal with its

possible consequences (to ensure contingency if the risk becomes a liability).

Dorfman ( 2007), noted that risk management also proposes applicable controls for the observed

risks. Therefore, risk management covers several areas that are vital for the profitability process.

However, the profitability process goes beyond risk management's preemptive approach and

assumes that the disaster will happen at some point which affects profitability.

Risk profitability analysis has become one of the most talked-about buzz-words in the banking

community lately and if not effectively managed impacts profitability in a company (Roehrig,

2006). With all the major investments in technology the banking industry has made to handle

current challenges like externally-imposed compliance and risk management requirements, you

would think that risk profitability analysis is under control. But although financial services

15

technology has made great advances in both profitability management and risk management, the

two capabilities have not been integrated effectively.

Risk management process reduces and in many instances can probably eliminate the cause of

unwanted or ill-fated losses, thus profitability. Any application will significantly improve the

quality of service offered. Cost and risk is always lowered and profitability for everyone

involved is always improved. When laws of physics and physical science, are integrated into any

risk management process, decisions can be aligned with the most favorable conditions currently

available to mankind (Frederick, 1999).

Qualitative risk assessment is sometimes subjective and lacks consistency in many companies

but when effectively done, it increases profits. The primary justification for a formal risk

assessment process is legal and bureaucratic. Prioritizing the risk management processes too

highly could keep an organization from ever completing a project or even getting started. This is

especially true if other work is suspended until the risk management process is considered

complete. It is also important to keep in mind the distinction between risk and uncertainty. Risk

can be measured by impacts on probability (Hubbard, 2009).

According to Donald (2004), risk management evaluates the cause of events, which is

consciousness and consequently improves profitability. Returns are the effects of human

consciousness operating in a trading environment. Risk cannot successfully be managed by

evaluating 'after effects' or forms already created. Power for constructive change will always

evolve from First Cause. Since the First Cause of all life is eternal, infinite, omnipotent, and

omniscient; one could conclude that First Cause is the only method of risk management that truly

allows the unlimited upside of life with much less risk to simply flow into our environment.

16

CHAPTER THREE

METHODOLOGY

3.0 Introduction

This chapter describes the procedures that were followed in conducting the study. It gives details

regarding research design, population of the study area, sample and sampling techniques, a

description of data collection instruments to be used, as well as the techniques that were used to

analyze data.

3.1 Research design

This study was a case study design. Case studies have the advantage of providing manageable

study area which is representative of other similar areas. The researcher employed both

quantitative and qualitative research methods.

3.2 Population

The population of the study included the employees and management of Stanbic bank

Wandegeya branch. The company has 77 employees who are both staff and administrators.

3.3 Sample size The study selected 60 respondents who participated in the study. These represented the rest of

the employees in the company to establish the effect of risk management on profitability in the

bank.

Table 1: Category of respondents

Category Population Sample size

Administration 7 5

Risk management department 18 15

Other departments 52 40

Total 77 60

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3.4 Sampling procedure

The following sampling procedures were used by the researcher to select the sample while in the

field;

3.4.1 Purposive sampling

In this method, the researcher targeted specific staff from risk management department, human

resource department and loan department in the bank. Such employees are believed to be more

knowledgeable about the effect of risks on profitability. Employees from the risks department

will also be interviewed to find out their views.

3.4.2 Simple random sampling

The researcher applied this method to all the employees in the selected departments of risk

management, loans, administration among others because of their large numbers. The researcher

applied this method to teachers because of their large population. Random sampling is

advantageous because it is free of bias.

3.5 Research Instruments

A questionnaire is a series of questions asked to individuals to obtain statistically useful

information about a given topic. Some questions were open ended while others close ended.

Questionnaires are popular with researchers because information can be obtained fairly, easily

and the questionnaire responses are easily coded.

3.5 Data sources

The study used the primary and secondary data sources. Primary data was directly from

respondents in the field whereas secondary data was getting the information from the existing

scholarly materials.

18

3.6 Data presentation and analysis

Data from the field was sorted, coded and entered in Statistical Package for Social Scientists

(SPSS). The relationship between risk management and profitability was evaluated using

Pearson’s correlation co efficiency using Statistical Package for Social Scientists (SPSS). Data

from questionnaires was presented in form of frequency tables, pie charts and bar graphs.

3.7 Procedure

The researcher wrote research proposal which was presented to the supervisor for approval and

thereafter was given an introductory letter and permission to conduct research. This is expected

to be completed by the end of April, 2011. This was followed by the preparation of the

instruments and introducing herself to the relevant respondents.

19

CHAPTER FOUR

DATA PRESENTATION AND ANALYSIS AND DISCUSSION OF FINDINGS

4.1 Introduction

This chapter presents data analysis and presents findings which include establishing the risk

management techniques, establish the profitability indicators and establishing the relationship

between risk management and profitability in Stanbic Bank-Wandegeya branch.

4.1 Demographic characteristics of respondents

Table 2: Sex of respondent

Sex Frequency Percentage

Male 41 68.3

Female 19 31.7

Total 60 100

Source: Primary dataRegarding the sex of respondents, majority of the respondents (68.3%) revealed that they were

males whereas 31.7% noted that they were females. The above findings therefore implied that

males were more willing and easily accessible to participate in the study.

Table 3: Age of respondent

Level Frequency Percentage

18-25 9 15

26-30 27 45

30-40 20 33.3

Above 40 years 4 6.7

Total 60 100

Source: Primary data

20

Regarding the age of respondents, 45% said that they were aged between 26-30 years, followed

by 33.3%who were aged between 30-40,15% who were aged between 18-25 years and 6.7%

were aged above 40 years. The study findings implied that the people who participated were old

enough to provide the relevant information.

Table 4: Marital status

Status Frequency Percentage

Married 31 51.7

Single 20 33.3

Separated 9 15

Total 60 100

Source: Primary dataRegarding the marital status, 51.7% were married with 33.3% were single or not married and

15% were separated and divorced respectively.

Table 5: Level of qualification

Level Frequency Percentage

Diploma 13 21.6

Degree 40 66.7

Post graduate 7 11.6

Total 60 100

Source: Primary dataMajority of the respondents (66.7%) revealed that they had attained degrees whereas 21.6%

noted that they had attained diplomas and only 11.6% had postgraduate qualifications. This

implied that the respondents had the knowledge of what the study is being investigated.

21

Table 6: Experience of the employee in Stanbic bank

Period Frequency Percentage

Less than a year 8 13.3

1-5 years 27 45

6-9 years 22 36.7

Above 10 years 3 5

Total 60 100

Source: Primary dataRegarding the experience, most of the respondents (45%) had worked in the bank for a period

between 1-5 years, followed by 36.7% who revealed that they had worked with the bank for a

period between 6-9 years with 13.3% and 5% saying that they had worked in the bank for a

period below one year and above 10 years respectively. This implied that they were the

respondents with the information needed for the study.

4.2 Techniques of risk management in Stanbic bank-Wandegeya branch

Table 7: Rating the risk management in stanbic bank

Very good Good Poor Very poor Not sure21(35%) 14(23.3%) 15(25%) 7(11.7%) 3(5%)Source: Primary dataRegarding the rate of risk management, 58.3% of the respondents revealed that risk management

was good whereas 36.7% noted that risk management was poor and only 5% were not sure

whether risk management was good or poor. The findings above show that risk management in

the bank was good.

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Table 8: Techniques of risk management used in the bank

Techniques Strongly Agree

Agree Disagree Strongly Disagree

Not Sure

There is use of insuarance in the bank to manage risks

6(10%) 40(66.7%) 8(13.3%) 2(3.3%) 4(6.7%)

The bank determines the rate of risk occurrence annually

29(48.3%) 22(36.7%) 9(15%) - -

The bank reports assets acquired to reduce cases of risk

14(23.3%) 29(48.3%) 10(16.7%) 7(11.7%) -

There is effective communication in all departments to reduce risk gap

13(21.7%) 40(66.7%) 7(11.7%) - -

Source: Primary dataRegarding the techniques of risk management, there is use of insurance in the bank to manage

risks as shown by 76.7% with 16.6% saying that insurance was not a tool of risk management

but 6.7% were not sure about the idea. Majority of the respondents (85%) noted that the bank

determines the rate of risk occurrence annually with only 15% indicating their disagreement

rearding the same issue. The bank reports assets acquired to reduce cases of risk as shown by

with 28.4% disagreeing with the idea. It was however noted that there is effective

communication in all departments to reduce risk gap as shown by 88.4% response but 11.6%

said that there is no effective communication in all departments to reduce the risk gap.

The above findings however implied that techniques of risk management are employed in the

bank for purposes of reducing risks which later translate into losses. Regarding the techniques of

risk management, there is use of insurance in the bank to manage risks as the bank determines

the rate of risk occurrence annually. The bank reports assets acquired to reduce cases of risk and

they also noted that there is effective communication in all departments to reduce risk gap. The

23

above findings however implied that techniques of risk management are employed in the bank

for purposes of reducing risks which later translate into losses.

The study findings are in line with Cliffs (2007), who notes that risk retention pools are

technically retaining the risk for the group, but spreading it over the whole group involves

transfer among individual members of the group and this is in form of insurance, in that no

premium is exchanged between members of the group up front, but instead losses are assessed to

all members of the group.

The findings are also in line with Wiley ( 2004), who said that risk communication is a complex

and it involve how to reach the intended audience, to make the risk comprehensible and relatable

to other risks, how to pay appropriate respect to the audience's values related to the risk, how to

predict the audience's response to the communication. A main goal of risk communication is to

improve collective and individual decision making. Risk communication is somewhat related to

crisis communication

Lam (2003), also supports the findings as he notes that the strategies to manage risk include

transferring the risk to another party, avoiding the risk, reducing the negative effect of the risk,

and accepting some or all of the consequences of a particular risk as the study found out in its

findings.

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4.3 Indicators of profitability in Stanbic bankTable 9: Rating the level of profitability in the stanbic bank

Very high High Low Very low Not sure10(16.7%) 29(48.3%) 13(21.7%) 4(6.7%) 4(6.7%)

Source: Primary dataRegarding profitability, most of the respondents (65%) revealed that the level of profitability was

high with 28.7% saying that the level of profitability was low and 6.7% were not sure whether

profitability was high or low. The findings show that the level of profitability was high in stanbic

bank-Wandegeya branch.

Table 10: Stanbic bank experiencing increased profitability

Level Frequency Percentage

Yes 37 61.7

No 19 31.6

Not sure 4 6.7

Total 60 100

Source: Primary dataOn the issue of profitability, still 61.7% of the respondents revealed that stanbic bank was

experiencing increasing profitability whereas 31.7% noted that the profitability levels were not

increasing but only 6.7% said that they were not sure whether the bank was experiencing

profitability or not. The findings above still prove that the bank was experiencing profits.

Table 11: Reporting revenue in Stanbic bank

Level Frequency Percentage

Very often 31 51.7

Not often 22 36.7

Not sure 7 11.6

Total 60 100

Source: Primary data

25

Majority of the respondents (51.7%) said that reporting revenue was very often but 36.7% noted

that revenue reporting was not often with 11.6% revealing that they were not sure about revenue

reporting in Stanbic bank.

Table 12: Indicators of profitability in Stanbic bank

Profitability levels Strongly Agree

Agree Disagree Strongly Disagree

Not Sure

There is an increase in assets acquired by the bank

19(31.7%) 22(36.7%) 13(21.7%) 6(10%) -

The overall profits have been increasing

19(31.7%) 22(36.7%) 13(21.7%) 4(6.7%) 2(3.3%)

The bank has been experiencing a consistent decline in profits

15(25%) 7(11.7%) 18(30%) 20(33.3%) -

The level of return on the assets of the bank have been improving

9(15%) 28(46.7%) 19(31.7%) 4(6.7%) -

Source: Primary dataRegarding the indicators of profitability, most of the respondents (68.4%) revealed that there is

an increase in assets acquired by the bank with 31.7% disagreeing with the idea. More so, most

participants (68.4%) noted that the overall profits have been increasing with 28.4% disagreeing

and 3.3% saying that they were not sure about the idea. The bank has been experiencing a

consistent decline in profits as shown by 63.3% of the respondents but 36.7% said that the bank

was not experiencing consistent profits. Most of the participants in the study (61.7%) revealed

that the level of return on the assets of the bank have been improving with 38.3% disagreeing

with the idea. It should be noted however that the level of profits have been increasing because

most the indicators of profitability are shown to be positive by the respondents.

Regarding profitability, most of the respondents revealed that the level of profitability was high

in stanbic bank-Wandegeya branch. The respondents revealed that stanbic bank was

experiencing increasing profitability because of operating risk free activities in all their

26

departments. The respondents noted that revenue reporting was consistent to reduce fraud and

there was also an increase in assets acquired by the bank. The bank has been experiencing a

consistent increased turn over and the level of return on the assets of the bank have been

improving. It should be noted however that the level of profits have been increasing because

most the indicators of profitability are shown to be positive by the respondents.

The findings are in line with Kaplan (2001), who notes that the profitability ratios are used to

measure how well a business is performing in terms of profit and once all of them are improving,

it implies that the company’s profits are also increasing and this was reflected in the study

findings because it was shown that profits were in an increasing trend.

Conroy (2005), also supports the study findings as he notes that profitability is the first

concern of all businesses and once there is a increase in risk management, profits will

automatically increase holding other factors constant.

27

4.4 Risk management and profitability in Stanbic bankTable 13: Relationship between risk management and profitability in Stanbic bank

Statements Strongly Agree

Agree Disagree Strongly Disagree

Not Sure

Risk management produce positive returns under unknown market conditions

26(43.3%) 8(13.3%) 3(5%) 20(33.3%) 3(5%)

Risk management influences future investment returns

7(11.7%) 27(45%) 5(8.3%) 18(30%) 3(5%)

There is a direct relationship between risk management and profitability

19(31.7%) 28(46.7%) 13(21.7%) - -

Risk management reduces future costs in any organization

12(20%) 27(45%) 14(23.3%) 7(11.7%) -

It reduces time wastage and losses

26(43.3%) 8(13.3%) 3(5%) 20(33.3%) 3(5%)

Proper risk management brings consistency in profitability

33(55%) 18(30%) 5(8.3%) 4(6.7%) -

Risks have an effect on the overall productivity

6(10%) 40(66.7%) 8(13.3%) 2(3.3%) 4(6.7%)

Improper risk management affects performance of a company

29(48.3%) 22(36.7%) 9(15%) - -

Source: Primary dataRegarding the effect of the risk management and profitability of stanbic bank, most of the

respondents (56.6%) revealed that risk management produce positive returns under unknown

market conditions but 38.3% disagreed with the idea but only 5% said that they were not sure

about the idea. More so, 56.7% noted that risk management influences future investment returns

with in the bank but 38.5% disagreed and 5% were not sure. Majority of the respondents (78.4%)

agreed to the idea that there is a direct relationship between risk management and profitability

and only 21.7% disagreed with the idea.

The respondents also noted that risk management reduces future costs in any organization (65%)

with 35% disagreeing with the statement. Most respondents said that proper risk management

reduces time wastage and losses and brings consistency in profitability as shown by 56.6% and

28

85% responses respectively but 38.5% and 15% of the respondents disagreed with the above

views respectively. Proper risk management has a positive effect on the performance of the

company a shown 85% of the respondents with 15% disagreeing with the idea. The information

gathered above shows that risk management has a direct impact on the level of profitability of

Stanbic bank.

5.4 Relationship between risk management and profitability in Stanbic bank-Wandegeya branch.Regarding the effect of the risk management and profitability of stanbic bank, most of the

respondents revealed that risk management produce positive returns under unknown market

conditions and it influences future investment returns with in the bank. Majority of the

respondents (78.4%) agreed to the idea that there is a direct relationship between risk

management and profitability once it is done accurately and with consistency, it reduces future

costs in any. Most respondents said that proper risk management reduces time wastage and

losses and brings consistency in profitability. Proper risk management has a positive effect on

the performance of the company. The information gathered above shows that risk management

has a direct impact on the level of profitability of Stanbic bank. The correlation analysis also

showed a positive relationship between risk management in Stanbic bank.

The findings are in line with Lam & James, 2003) who noted that if risks are improperly assessed

and prioritized, losses may set in and time can be wasted in dealing with risk of losses that are

not likely to occur. They also noted that unlikely events do occur but if the risk is unlikely

enough to occur it may be better to simply retain the risk and deal with the result if the loss does

in fact occur.

29

Lam & James (2003) further noted that improper risk assessment is one of the major factors

identified as threatening company performance and profitability.  Companies who prioritize their

risk and put resources behind managing the biggest threats experienced 20 higher revenue

growth and up to 50 percent higher earnings than their peers or competitors. That's compelling

evidence.  Implementing proper risk management therefore makes common sense as well as a

ton of business sense.

The findings are also in line with Mesler (2004), who noted that ideal risk management

minimizes spending and minimizes the negative effects of risks because legal audits offer a

systematic way for companies to identify and diagnose business hot spots.  The best audits also

look below the surface and connect the dots between hotspots and the business functions and

decision makers who create them. The added level of detail helps create a blue print for

customization and a way to ignite profitability.

30

Table 14: Correlation analysis showing the relationship between the risk management and profitability in Stanbic bank.

Correlations

1 .827**. .000

60 60.827** 1.000 .

60 60

Pearson CorrelationSig. (2-tailed)NPearson CorrelationSig. (2-tailed)N

Rating risk managementin Stanbic bank

Rating the level ofprofitabity in the bank

Rating riskmanagement

in Stanbicbank

Rating thelevel of

profitabityin the bank

Correlation is significant at the 0.01 level (2-tailed).**.

The study also employed a statistical analysis of Pearson correlation which showed that there is a

relationship between risk management in Stanbic bank and its level of profitability. The positive

relationship is shown by a positive Pearson correlation value (0.827**) with the level of

significance (P=0.01). The significance (P=0.01) shows that the relationship between risk

management and profitability is significant.

31

CHAPTER FIVE

SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATIONS

5.1 IntroductionThis chapter presents summary, conclusion and recommendations regarding the study findings

according to the objectives which include establishing the risk management techniques, establish

the profitability indicators and establishing the relationship between risk management and

profitability in Stanbic bank-Wandegeya branch.

5.2 Risk management techniquesRegarding the techniques of risk management, there is use of insurance in the bank to manage

risks as the bank determines the rate of risk occurrence annually. The bank reports assets

acquired to reduce cases of risk and they also noted that there is effective communication in all

departments to reduce risk gap. The above findings however implied that techniques of risk

management are employed in the bank for purposes of reducing risks which later translate into

losses.

5.3 Profitability indicators Regarding profitability, most of the respondents revealed that the level of profitability was high

in stanbic bank-Wandegeya branch. The respondents revealed that stanbic bank was

experiencing increasing profitability because of operating risk free activities in all their

departments. The respondents noted that revenue reporting was consistent to reduce fraud and

there was also an increase in assets acquired by the bank. The bank has been experiencing a

consistent increased turn over and the +6level of return on the assets of the bank has been

improving. It should be noted however that the level of profits have been increasing because

most the indicators of profitability are shown to be positive by the respondents.

32

5.4 Relationship between risk management and profitability in Stanbic bank-Wandegeya branch.Regarding the effect of the risk management and profitability of stanbic bank, most of the

respondents revealed that risk management produce positive returns under unknown market

conditions and it influences future investment returns with in the bank. Majority of the

respondents (78.4%) agreed to the idea that there is a direct relationship between risk

management and profitability once it is done accurately and with consistency, it reduces future

costs in any. Most respondents said that proper risk management reduces time wastage and

losses and brings consistency in profitability. Proper risk management has a positive effect on

the performance of the company. The information gathered above shows that risk management

has a direct impact on the level of profitability of Stanbic bank. The correlation analysis also

showed a positive relationship between risk management in Stanbic bank.

5.5 Conclusion Basing on the study findings therefore, it is evident that risk management is positively related

with the level of profitability in Stanbic bank. This is so because most of the statements

regarding the effect of risk management on profitability were scored positively by the

participants in the study. The study also revealed that the bank employs several risk management

techniques which perhaps explains the increasing and consistent levels of profitability in the

bank because it was shown that the profitability level were increasing.

33

5.6 RecommendationsThe researcher recommended the following;

1. Banks need to always identify their legal risk profile and target these hot spots earlier not

to be caught off guard. Determining the legal risk profile allows your company to target

training and cultivate legal literacy where it is needed most.  It helps you create a

prioritized agenda. if risks are improperly assessed and prioritized, time can be wasted in

dealing with risk of losses that are not likely to occur.

2. There is need to employ enterprise risk management in banks because risks are possible

events or circumstances that can have negative influences on the enterprise in question. In

a financial institution, enterprise risk management is normally thought of as the

combination of credit risk, interest rate risk or asset liability management, market risk,

and operational risk. In the more general case, every probable risk can have a pre-

formulated plan to deal with its possible consequences to ensure contingency.

3. Banks and other companies prone to risks need to always carry out a risk profitability

analysis. With all the major investments in technology the banking industry has made to

handle current challenges like externally-imposed compliance and risk management

requirements, you would think that risk profitability analysis is under control. But

although financial services technology has made great advances in both profitability

management and risk management, the two capabilities have not been integrated

effectively.

34

REFERENCES

Charles, Tapiero (2004). Risk and Financial Management: Mathematical and Computational Methods. John Wiley & Son. ISBN 0-470-84908-8.

Cliford, (2000). An Introduction to Risk Management (2nd ed.). Woodhead-Faulkner. ISBN 0-85941-332-2.

Conroy (2005), Customer Profitability, and the Treatment of Acquisition Spending," Journal of

Managerial Issues, 17 (1), 11-25.

Covello, Vincent T.; Allen., Frederick. (April 1999). Seven Cardinal Rules of Risk Communication. Washington, DC: U.S. Environmental Protection Agency. OPA-87-020.

Donald R., (2004), Tools and Techniques for Integrated Credit Risk and Interest Rate Risk

Management. ISBN 978-0470821268

Dorfman, Mark S. (2007). Introduction to Risk Management and Insurance (9 ed.). Englewood Cliffs, N.J: Prentice Hall. ISBN 0-13-224227-3.

Haenlein, Michael and Kaplan, Andreas M. (2009), “Unprofitable customers and their management.” Business Horizons, 52 (1), 89-97.

Helgesen, Ø. (1999) "Customer Accounting and Customer Profitability Analysis - Some Theoretical Aspects and some Empirical Evidence", SNF Working Paper, No. 67.

http://www.btquarterly.com/?mc=bet-governance&page=ss-viewresearch.

Hubbard, Douglas (2009). The Failure of Risk Management: Why It's Broken and How to Fix It. John Wiley & Sons. p. 46.

John Wiley (2004), Business Trends Quarterlyand their risk involvement.

Kaplan, R.S. and V.G. Narayanan (2001), “Measuring and Managing Customer Profitability.” Journal of Cost Management (September/October): 5-15.

Lam, James (2003). Enterprise Risk Management: From Incentives to Controls. John Wiley. ISBN 978-0471430001.

Roehrig, P (2006). "Bet On Governance To Manage Outsourcing Risk". Business Trends Quarterly. http://www.btquarterly.com/?mc=bet-governance&page=ss-viewresearch.

35

Rosemary Peavler, 2001), What is the operating profit margin ratio.

Stanbic bank-June 2010 Interim Financial Statement

van Deventer, Donald R., Kenji Imai and Mark Mesler (2004). Advanced Financial Risk Management: Tools and Techniques for Integrated Credit Risk and Interest Rate Risk Management. John Wiley. ISBN 978-0470821268.

36

QUESTIONNAIREDear sir/madam I am Tusiime Judith a student of Makerere University and intend to find out the relationship between risk management and profitability. The information will be treated with utmost confidentiality and no one’s’ names will appear in report writing. Your cooperation of participation in this study is highly appreciated.

SECTION ONE; Bio data

1. Sex Male Female

2. Age 18-2526-3030-40 Above 40 years

3. Marital statusMarriedSingleDivorced

Level of qualificationDiplomaDegreePost graduate

Experience of the employee in Stanbic bankLess than 1 year1-5 years6-10 yearsAbove 10 years

37

SECTION TWO; Evaluation of risk management techniques

4. How do you rate risk management in stanbic bank?

Very good Good Poor Very poor Not sure

Indicate your level of agreement regarding the techniques of risk management used in the village bank (SA-strongly agree A-Agree D-Disagree SD-Strongly disagree NS-Not Sure).

Techniques SA A D SD NSThere is use of insuarance in the bank to manage risksThe bank determines the rate of risk occurrence annuallyThe bank reports assets acquired to reduce cases of riskThere is effective communication in all departments to reduce risk gapSmall risks are usually shared over the whole group

7. What other tools of risk management are used in the bank/?……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………….…………………………………………………….

38

SECTION THREE: Indicators of profitability in Stanbic bank

8. How do you rate the level of profitability in the Stanbic bank?

Very high High Low Very low Neutral

9. Is Stanbic bank experiencing increased profitability?YesNoNeutral

10. How often does Stanbic bank report revenue?Very oftenNot oftenNot Sure

11. Indicate your level of agreement on the following statements regarding the indicators of profitability in Stanbic bank (SA-strongly agree A-Agree D-Disagree SD-Strongly disagree NS-Not Sure ).

Profitability levels SA A D SD NSThere is an increase in assets acquired by the bankThe overall profits have been increasing The bank has been experiencing a consistent decline in profitsThe level of return on the assets of the bank have been improving

10. What can be done to improve profitability in Stanbic bank?………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

39

SECTION FOUR: Relationship between risk management and profitability in Stanbic bank

11. Indicate your level of agreement on the following statements regarding the relationship between risk management and profitability

SA-strongly agree A-Agree D-Disagree SD- Strongly Disagree NS-Not Sure

Statements SA A D SD NSRisk management produce positive returns under unknown market conditionsRisk management influences future investment returnsThere is a direct relationship between risk management and profitabilityRisk management reduces future costs in any organizationIt reduces time wastage and lossesProper risk management brings consistency in profitabilityRisks have an effect on the overall productivityImproper risk management affects performance of a company

12. What can be done to improve risk management in the village bank?………………………………………………………………………………………………………

………………………………………………………………………………………………………

………………………………………………………………………………………………………

…………………………………………………………………….

Thank you

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