A study on risk management practices in online banking in bahrain

Abstract

One of the most significant technological advances that has influenced banking practices in recent years is online banking services. Those services creates the risks that banks should be aware of, and therefore should implement very strict measures of risk management, which made Basel come up with a framework of principles to successfully mitigate and deal with online banking risks. Hence, the Researchers conducted this research to study risk management in online banking in the Kingdom of Bahrain in terms of the framework provided by Basel and investigate the extent to which they applying these principles, as well as discover the perception of banks on risks associated with online banking. The Researchers conducted a semi-structure interview as a pilot study with three risks managers in various banks in Bahrain to be provided with an in-depth picture about risk management related to online banking. Moreover, a survey questionnaire was developed and distributed to nine commercial banks in Bahrain to investigate and determine their application of the 14 principles of online banking risk management by Basel. Results show that banks in Kingdom of Bahrain are working well in terms of the principles, as they have a very positive understanding of risk management and risks imposed by online banking.