Project Risk Assessment and Risk Mitigation Proposal v.7.1

Project for the Amalgamation of
CBB with CBE
Report on Project risk assessment

and Risk Mitigation proposal
By: Risk management Team
Addis Ababa
February 22, 2015
Project for the Amalgamation of CBB with CBE: Risk Management Team 2016
Acronym
CBE: Commercial Bank of Ethiopia

CBB: Construction and Business Bank
NBE: National Bank of Ethiopia
TS: Trade Service
CATs: Customer Accounts and Transactions
RM: Risk Management
RCM: Risk and Compliance Management
Report on Project risk assessment and Risk Mitigation proposal
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Contents
1. Introduction ................................................................................................................................... 4
2. Objectives....................................................................................................................................... 5
3. Scope ............................................................................................................................................... 5
4. Project Risk Implications of Action Plans of Project Technical Teams ................................. 6
4.1 Finance Technical Team .............................................................................................................. 6
4.2 Credit Assessment, Reclassification and Consolidation Technical Team .......................... 14
4.3 Trade Service Technical Team................................................................................................... 17
4.4 Legal Technical Team ................................................................................................................. 22
4.5 Branch Rationalization Technical Team ................................................................................. 25

4.6 IT Infrastructure Evaluation and Integration Technical Team .............................................. 28
4.7 Assesment & Placement Technical Team ................................................................................ 34
4.8 Orientation on CBE Strategies & Change Management Technical Team .......................... 37
4.9 Communication & Awareness Creation Technical Team ..................................................... 38
5. Concluding Remarks................................................................................................................... 41
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1. Introduction
The recent government decision for the eventual takeover of the Construction and
Business Bank by the CBE and it's ultimate liquidation is been carried out by forming a
consolidation project with a clearly defined governance structure and a tight time
schedule to complete the task. A clean consolidation of the CBB with CBE in accordance
with acceptable accounting standards and incompliance with applicable laws and
regulations required to be observed under such circumstances while institutional memory
and traceblity and integrity of records are ensured iz a task which requires expert
planning, knowledge and commitment from all project personnel called up on to do the
job. Furthermore; a soft issue of integrating the two banks human resource is another
dimension which requires far more due deligence and careful planning than the rest of
the consolidation tasks of the project.
One of the planned activities and hence deliverables of the Risk Management Team of
this project is to assess the project risk implications of the plan of actions drawn by the

project's nine teams save the plan drawn by the risk assessment team itself. As per it's
plan; the team has mitculesly analyzed the action plans drawn by these nine technical
teams and tried to determine activities planned by the teams actually do cover every
asspect of the consolidation of the two banks and are consistent among these nine teams
(i. e. there input and output dependancies are well figured out).
In this report; we have presented our observations of which some may prove to be
highly important while the others rudementary and with tolerable risk implications on
the successful achievement of the project objectives. This is partly because risk implication
of project planning issues are not measured to determine the severity or otherwise of
risk implications as there are no methodologies adopted by CBE which is the ultimate
institution regarding which we intend to protect from project risk eventualities.
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2. Objectives
The objective of this risk assessment report is to identify project planning related risk
exposures and come up with risk mitigation proposals to be adopted by the project
office and project teams while handling the takeover and; as appropriate, by the CBE
during and after the takeover of CBB in order to achieve the amalgamation projects
ultimate objective of a smooth, reliable and verifiable consolidation of the two
institutions assets, liabilities, contingencies and their human resources and other intangible
resources.
3. Scope
The scope of this risk assessment covers the nine project technical teams plan of action
submitted to the project office and subsequently tabled to the steering teams approval. The
only action plan which is not reviewed in a bid to identify project planning risk implication

on the successful achievement of the project is that of the risk assessment teams plan.
Subsequent plan changes made are not taken in to consideration and hence users of this
report are advised to examine the effect of any plan changes on the identified risk
implications of the original planning and/or whether or not the changes can be viewed as
risk mitigations for identified risks in this report. Apart from reviewing project plans; this risk
assessment considers banking or non-banking operations, documentations, asset and liability
verification and handing over issues which are not covered in the project plans.
Furthermore; post-merger implications on CBE as a result of the manner some of the
activities planned are going to be handle by the project teams and/or on the issues not
considered in the planning exercise at all are included in this assessment while planning its
scoping. Only possible causes of project risks are examined & formulations of mitigation
proposal are included within the scope of this assessment. Hence standard risk event
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identification and measurement methodologies are not adopted as the time required to do
that will compromise the relevance of the risk assessment report in addition to the absence
of identification and measurement methodologies for this kind of risk in both CBE and CBB
risk management programs.
4. Project Risk Implications of Action Plans of

Project Technical Teams
4.1 Finance Technical Team
The Finance Team Action Plan review resulted the below fourteen Project Risk areas
which we believe should be recognized and for which mitigation mechanisms be
instituted.

a. All receivable and payable accounts and blocked deposit accounts at braches
representing various depositors should be broken down in to their constituent
outstanding items & the aggregate of which should agree with their respective
suspense GL accounts which may take extended time to carry out: there are
numerous receivables and payable accounts which require breaking their
balances to the last detail and planning should also deal with updating them
appropriately in a manner the details reconciled with account balances can be
handed over to branches and appropriate organs at the home office. Besides
the many accounts which are required to be reconciled and kept updated
afterwards at head office finance and CATs center; branches also maintain
receivables and payable accounts and hence those records also need to be
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handled and keep updated. It has also been the practice of CBB to use a single
saving account to entertain various customers who are required by
municipalities to block certain amount mostly in association with housing and
land lease arrangements. If that practice remains to this day such account
balances need to be reconciled and keep updated just like and payable
account. The six week time allotted for reconciliation of suspense accounts by
the finance team appears to be at odds with the depth of the task and the
verifiability of the manner such accounts are going to be handed over to CBE
designated branch or head office management. The risk implication can be
extension of project conclusion or heightened post-merger operational risks to
CBE.
Mitigation: our recommendation is to look in to this task through to the end
which is the final verifiable handover to CBE and design a strategy how to go
through this and while doing that to determine the extension time requirement
and/or HR requirement right away.
b. The fixed asset tagging may depend the ultimate location of the fixed assets as

the fixed asset coding scheme is assumed to capture the fixed asset location:
the tagging of fixed assets planned to be done by the sub team under the
finance team does not assume the result of the branch rationalization issue
which would mean some branches will be retained and hence they may
require a new branch code to be used in the fixed asset coding scheme and
hence to be used in the tagging while some branches will get closed and hence
assets there should be sent somewhere and that may affect the particulars of
the tags. Similar implication may be deduced regarding asset tagging at head
office. This may mean retagging and re-recording of fixed assets which may
duplicate cost and may affect fixed assets handing over activity which will in
turn affects project successful and timely conclusion.
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Mitigation: To count and balance fixed asset vis-a-vis fixed asset detailed
record and to verify that with CBB GL fixed asset records and to synchronize
the tagging task with the decisions on the fate of branch rationalization output
and dvisions to be made based on a proposal to retain or dispose particular
fixed assets the responsibility of which the finance team may assume
ccapitalizing on its fixed assets inventory sub team's observations while
conducting its count. The actual coding of fixed assets as per CBE coding
structure can be handled after the merger provided that by whom, how,
within what time frame, etc. is put forth in an approved action plan.
c. Handing and taking over of fixed assets and relevant documents are not
included as the teams responsibilities: the responsiblity to carry out and the
procedure to be adopted upon actual fixed asset handing and taking over
between takingover CBE supervisor, manager, director, etc. and handingover
CBB PSM Process, the rest of CBB Processes including Executive Management
Offices and Branches are not included in this or any of the rest of the teams'
activities in thier action plan. This will lead to a probable disorganized and

undocumented takeovers which may result loss of asset in the preceived
meath. estabulish and should be handled based on a clear strategy, handing
and taking over formats and the manner these documents will be used and
retained after the merger, etc.
Mitigation: The responsiblity for handling handing & takeing over of fixed
assets should be clearly established as this or another project the technical team
responsiblity and it should be handled based on a clear strategy, handing and
taking over formats and a defined directive on the manner these documents
will be used and retained after the merger, etc.
d. New GL Accounts that may need to be created at CBE GL and amendments on
CBE GL and summery and detail financial statement line definitions in T24 and
other applications producing financial reports is not considered: some deposit
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and credit products may have distinct features which may require CBE to
handle them by creating separate products other than those it already has.
That may require separate category definition in T24. Hence either new line
definitions in CBE GL and summery and detail financial statements already
defined in T24 and other report processing applications it is using currently
may be required or existing lines may require amendments to accommodate
the new categories defined. Obviously; if there are multiple such cases for
some the former may be appropriate and the latter may be appropriate for the
rest of them. Unless; these issues are entertained in the planning and the
manner the decision to such effect is going to be made and executed are
preplanned the project completion task may be dragged and hence the
consolidation date can be pushed forward unnecessarily. If such considerations
are not entertained appropriately it may result blending products which have
distinctly different characters. An example can be the special saving product
CBB has in which CBB and the depositors under this scheme have distinct
contractual commitments for both of them to be abide by.

Mitigation: Evaluating deposit and credit products and identifying those which
require new product specification, tabling these proposal for decision along
with proposal execution strategy and responsibility, communicating the details
of the setup done in CBE T24 as an input to IT Team for its data mapping and
migration task are the recommended course of action to avoid this risk as it
can indeed almost entirely be avoided.
e. Although it is stated that one of the outputs of the team is separate financial
statements for CBB and CBE and consolidated financial statement after the
merger; it is not clearly provided whether the separate financial statement for
CBB shall be based on CBB GL structure or after the Reclassification of
Accounts and their balances as per CBE GL structure: this confusion may cause
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final verification of the financial consolidation to be hardly easy besides

causing the integrity of consolidated books to be questionable.
Mitigation: our rcomendation is two prepare two reports for CBB: one as pee
it's existing classification and the other according to the reclassification made to
handle the consolidation. The team then should reconsider the two to verify
both are true image of one another with only the effect of balances reported
at different report lines as a result of the reclassification. The latter can then be
used to validate the consolidated statement to help ensure the integrity of the
consolidated statement.
f. Branches Accounts and documentations Takeover by the Team and
afterwards Handing over to CBE Branch Management or intermediating the
takeover of accounts and documents by CBE Branch Management is not
covered as an activity by the Team: Branches have multiple and critically
important documents which need to be verified (including verification against
system records) which are left not specifically entrusted to this or any other
teams' responsibility. This will lead to loss of documents, history of records,

integrity of static and financial data and ultimately to financial losses as a result
of multitude of operational risk exposures CBE may face.
Mitigation: This can be a rather straight forward conclusion from the risk
discription. That is; the task should have a team responsible to execute it.
g. Prepararion, Consolidation and handing over of Consolidated Branch financial
reports and consolidated district reports are not included among the activities
of the Team: Branch management which will takeover CBE Branches
introduced as a result of the merger or takeover closed branches assets and
liabilities should verify and acknowledge there new financial position and
financial performance (if the merger is done at a different date other than the
first day after annual closure of books). Likewise; the implication on districts
financial reports should also be captured, verified and handed over to districts.
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The consolidation process will not address clear and down to earth take over
which will lead to probable book keeping problems sfter the conclusion of the
merger with financial loss implications.
Mitigation: Consolidated Branch financial reports and consolidated district
reports should be verified and properly handed over accordingly.
h. The pooling method of consolidation will undermine CBEs financial benefits
out of the consolidation process and may lead to qualified or adverse audit
opinion: while technically IFRS complaint; the takeover can be handled by
revaluing CBB's Assets to their respective fair values which would; taking a
rather wild estimate, may give CBE the opportunity to increase its capital by
about ETB 1 billion more than what will the inctease in CBE's capital will be
under the recommended and adopted pooling of interest method.
Mitigation:
i. The stock reconciliation may take an extend time which may compromise the
consolidation finalization scheduled date: the experience of CBB in stock
reconsilation may suggest that taking a reconsiled stock records with that of

the GL stock account balanxes to be hardly possible. Therefore; evenif stock
acvounts reconsilation with GL as of the cut of date asdumed by finance team
is achieved; reconsiling stocks at the date of the consolidation may not be
easy to accomplish in a day to go on with the consolidation and handing over
tasks. Therefore; this may be a probable cause of delay to conclude the
consolidation within the planned period.
Mitigation: Once stock items are reconsider with the he cut off date GL
balance; a strategy should be designed to maintain the status quo in as much as
possible. Doing that will mean very few stock transactions to absent
GL/Subsidiary agreement of stock items.
j. Stock items needed to be written-off and disposed should be incorporated as
part of the teams activities in its action plan: the identification, proper control
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and subsequent disposal of sensitive stationary and security printings are

serious takeover project activities which may require particularly specific
reports for the project's steering team attention. The absence of these activities
among the activities and; their outcome, among the deliverables, puts the
projects successful achievement of smooth and with in scheduled consolidation
objective at jeopardy.
Mitigation: write off and disposal plans of stationaries & security printings with
CBB headings should be counted, verified and audited so that they can be
disposed off in a planned and secure manner so that the presence of this stock
items will not jeopardize the operational risk eexposure of CBE which this
project is entrested to contsin to tolerable/managable levels.
k. The financial consolidation process requires adequate testing as the migration
of accounts and consolidation are not straight forward hence require
simulation exercise for correctness of the migration process to yield the
consolidated financial statements which should be subject to the finance team
verification: the financial consolidation will be ultimately carried out through

the migration of financial and static data migration of CBB'S records to CBE'S
T24 CBS. If that is the case; successful consolidation depends on the success of
the migration process. Failure to recognize to take part in the verification of
the migrated data vis-a-vis the expected end result of the migration which is
the final consolidated financial reports may undermine the success of the
project in fulfilling it's objectives with the expected level.of integrity and within
the specified time period.
Mitigation: The finance team should plan to take part in the migration process
and press and post data migration verification process in the simulation as well
as actual.final migration of records to CBE'S CBS and other applicstions (i. e.
for subsidiary records in the event other applications are used at CBE to handle
them).
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l. The Head offices Accounts and documentations Takeover by the Team and
afterwards Handing over to the Head Office Finance Function or
intermediating the takeover of accounts and documents by CBEs Head Office
Finance Function is not covered as an activity by the Team: if the balances of
accounts in the books of records of CBB plus all relevant documents are going
to be taken over by the finance team (i.e. of course including those records at
the CATS Center); the procedure, formats to be used to handle the handover
plus the documentation for future verifiablity should be among those activities
the team needs to take care of. To some extent the team is anticipating to take
care of taking over accounts but neither that completely covers what is
expected to be taken over nor does it anticipate the handing over of what it
has taken over permanently in a permanently verifiable manner to authorized
CBE management.
Mitigation: The Head offices Accounts and documentations Takeover from
the team and/or the FM Process of CBB should be incorporated in the team's
action plan.

m. Counting and taking over cash and cash equivalents should be included in the
action plan as of the final consolidation date: these tasks are rather commonly
anticipated tasks upon transferring ownership or responsibility over cash
particularly in the banking industry. The fact that they appear ov r looked
may have serious operational risk implication to the project and CBE.
Mitigation: A well structured guide on how cash count and takeover and
handing/taking over verification and documentation should be handled shold
be identified the team's responsibility.
n. The huge sum of asset under software in progress should merit a proposal on
how it should be taken over by CBE as the software implementation cost and
software purchases are no longer represent an asset with a future value to the
extent recorded in CBB Books: this account balance represents a variety of BSSI
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Project costs which are costs accounted the bank's investment in designing and
building standard DC & DRC procuring all necessary equipments, servers,
accessories, etc. and T24 CBS aquistion and implementation costs. CBE needs
to determine which costs in this asset account have future economic value and
which represent a sunk cost of no use for CBE and immediate post merger
write off decision recomendation can be formed, tabled for steering team
approval and implemented. Otherwise; the consolidated financial position
may not be the fair representation of CBE'S financial position after the
takeover.
Mitigation: distinguish between the costs of economic value and the costs
which are not and table a clear proposal for endorsement.
4.2 Credit Assessment, Reclassification and

Consolidation Technical Team
The following three Project Risk Implications have come to our attention while we

review the action plan of the Credit Assessment, Reclassification and Consolidation
Team.
a. The Teams Objective are not complete which means project objectives may
not be clearly understood: Classifying loans and advances as per CBE Portfolio
classification, consolidating loans and verifying consolidated credit portfolio
after migration, resolving interest rate variations, follow up and update data
until the final migration, plan for handing over of loan account balances vis--
vis the loan files and security documentation to the appropriate CBE Credit
Center and actually doing it and finally the implementation of approved
consolidation plan are not among the objectives listed in the action plan.
These objectives which should have been translated in to planned activities
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may undermine the project timely completion and/or increase the possibility
of operational and credit risks of CBE after the merger.
Mitigation: the recommended actions are obviously to redefine the teams
objective and hence to include the above tasks as planned activities of the
team and evaluate the time and human resource requirement to handle the
job accordingly.
b. There is no cut of date in the plan and update procedure afterwards: the
action plan does not state a cut of date for its verification and taking over
activities. Thus the update procedure if and when it is adopted will have no
clear reference as to from which date updates are handled up to the conclusion
of the consolidation. This will have adverse balance verification implication
against the balances reported in the GL which will as well affect the finance
and data migration tasks.
Mitigation: clearly define a cut of date for its activities.
c. The loans approved but not disbursed as of the cut of date, loan approvals
and disbursements and disbursements and write offs of undrawn balances in

the interim period should have been clearly stipulated and stipulated to
require verification vis--vis data from the System rather than file verification
only: the conclusiveness of the credit operation consolidation with CBE is at
jeopardy because whatever cut of date the team has used on that cut of date
there may be loans approved but not yet created in the AA module of T24 as
an arrangement or if created they may not have a balance yet because the
disbursement is not done yet. Furthermore; the update activity and update
procedures are not preplanned as an activity in the teams action plan to
account for new approvals after the cut of date, subsequent disbursements
and/or write offs of undrawn balances. The exclusion of these activities from
the plan may render the project in a last minute rushed activities to handle
these issues which may result a credit consolidation with heightened
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operational and credit risks to CBE after the merger. The other alternative
course of action to correct this planning inadequacy is to extend the projects
original implementation period.
Mitigation: to correct the plan to account for loans approved but not
disbursed at the cut of date and subsequent updates to account for
disbursements made to these or other loans with partial undrawn balances at
the cut of date, undrawn balance write offs and new loans and disbursements
made both in the interim period until the final consolidation date.
Furthermore; the verifications of documents purporting approval of loans,
disbursements made and undrown balance written offs should be planned to
be done against the data captured in the banks CBS.
d. A course of action after merger if loans approved are not disbursed at all until
the final consolidation date: loan approvals made during the interim period; if
for any reason there disbursement is not done in time before the consolidation
process is over, may merit to be tabled for CBE management for re-evaluation
of the approvals to ensure their conformity to its credit policies and

procedures. This consideration and a proposal of action as a deliverable
regarding such cases are missing from the teams action plan.
Mitigation: to include this activity in the action plan and a specific proposal as
its deliverable is advisable.
e. Collateral data verification vis--vis the collateral data captured in T24 and
limit definitions in T24 duly reconciled with documentations to support them
should have been covered in the action plan: If CBEs collateral data
maintained in its CBS is reasonably reliable; the team should have considered
collateral and limit data cleansing vis--vis the documents in the loan files.
Unless; this activity is done CBEs data after the merger will be useless as
collateral and limit data maintained in CBB application are unreliable as per
CBBs previous risk assessment on credit risk exposures.
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Mitigation: in the event CBEs own collateral and limit data have reasonable
degree of integrity; collateral and limit information captured in CBBs CBS
should be among the tasks listed in the teams action plan.
f. The review result should include or should be followed by a course of action
which can be executed during the interim period or; if that is not
possible/applicable, after the merger so that the center taking over will take
over along with sets of courses of actions approved by the steering team: this
is an important aspect of the merger process which helps the project to
eliminate probable financial loss as a result of the manner the merger process is
handled by the project. For instance; if a security contract registration or
collateral insurance policy requires a renewal it can be specified as an interim
period action or a post-merger course of action specification for the center
taking over the loan is required to proceed with.
Mitigation: to plan course of action to be disclosed in the handing and taking
over document design and to capture required actions and to keep them
updated in the interim period is recommended. Obviously; the actions needed

to be taken will be specified in the handing/taking over document to be used
on the date of consolidation.
4.3 Trade Service Technical Team
The Trade Service Team Action Plan and its relationship with the rest of the other eight
teams' action plans have also important aspects the project needs to look in to so that
the project is concluded successfully and within the planned time period. These identified
project risk exposures are discussed as follows.
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a. Balancing the Difference in Commitments and Margin Accounts by coming up

with a proposal to do that and obtaining CBB Management and/or the
Steering Committees approval for action is an activity left unspecified: due to
various reasons in handling trade service activities CBB GL and Trade Service
reports require reconciling remedy to be administered before CBB is dissolved
and it's on and off balance sheet assets/liabilities and its expenses and
recognized and suspended income account balances are consolidated with that
of CBE. As the team already uncovered there are LCs which are kept in excel
because the liability reversal date in T24 is not extended and hence up on
expiry the system has reversed the LC Commitments. Margin held balance
reported by Trade Service Process is also not in agreement with the Margin
Account GL balance.
Mitigations: This should be remedied one way or another prior to the last
consolidation of the two bank books.
b. Reclassification of LC's Guarantees and CADs as per CBE's Classification of
Commitments as per it's GL organization and Product Definition in CBE T24

should be among the very first deliverables critical for the data mapping and
Migration Activities by IT Team: In the main body of the action plan and in
all the Gantt charts presented in the appendices of the action plan; the team
does not explicitly defined this as its responsibility and defined it's deliverable
accordingly. Nevertheless; in one of the appendices the team anticipates
reclassifications from February 8 to March 3, 2015. Thus; it appears that the
teams plans are not well structured and consistent within the document itself.
As a result of the plan confusion the migration process may face unnecessary
back and forth activities which may result difficulty to finalize the
consolidation on time or a consolidation which suffers from wrong
classifications and hence result post-merger wrong financial reporting
implications for CBE.
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Mitigation: to plan and execute reclassification as per CBE classification of

Trade Service products and resolve the plan consistency in its action plan is
recommended.
c. Difficulty to handle Outstanding LC's, CADs and Guarantees transferred to CBE
after the Takeover: the fact that CBB will cease to exist may result documents
to be mailed to the wrong place or be undelivered, reimbursements cannot be
made or may become difficult until correspondents verify the merger and
CBE's authority over the accounts maintained with them, etc. Thus; this may
require clear planning and actions to minimize if not entirely eliminate such
cases. The absence of this activity from the team plan may lead to a stained
project implementation success as handling the outstanding cases may prove to
add cost while it may result customer dissatisfaction.
Mitigation: Proposal for the courses of Actions to be taken during and after the
merger process including clearly defined responsibilities and action follow up
mechanisms should be among the deliverables by the Team so that
Outstanding LC's, CADS and Guarantees will be handled without causing

unnecessary delays, customer complaints and of course without incurring
additional cost.
d. Foreign exchange commission payable account balance may be targeted to
instigate fraud: many years ago this account was targeted to inflict fraud taking
an advantage of the then situation of not looking in to what constitutes the
balance and simply transferring whatever is there to NBE. Thus; reconciling this
account balance as at the cutoff date and updating it thenceforth may be
required to be handled in cooperation with the finance team.
Mitigation: The action plan may stipulate reconciling foreign exchange
commission payable account which otherwise mean an interface point with
finance team together with whom the account needs to be reconciled and
keep on updated it up until the final consolidation date.
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e. Reconciliation of money transfer outstanding receivables awaiting

reimbursements by money transfer agencies and the fate of CBBs Money
Transfer Agency Relationships: the reconciliation of the money owed to CBB
by money transfer companies, a proposal on how and starting form when to
end the money transfer agency relationship and collect the money transfer
companies owed as updated after the cut of date reconciliation and the
implementation of the approved proposal regarding these agency relationships
are not covered as part of the project activities and decision areas as implied
from the teams action plan. Nonetheless; subsequent discussions help surface
these issues to the teams attention. Plan revision to plan the activities and
implementation time and human resource requirement is necessary to
minimize the project risk implications of these issues.
Mitigation: The action plan should be revised to incorporate reconciliation of
money transfer outstanding receivables awaiting reimbursements by money
transfer agencies and a proposal on how to proceed to close the money
transfer relationship after collecting the outstanding payments (i.e. assuming all

money transfer agency relationships are duplicates since all have relationship
with CBE as well).
f. Review of Outstanding Facilities is not covered in the plan: this or the credit
team should have covered the outstanding facilities review of documentation
and terms and conditions, conformity with CBE policies and procedures and
come up with a proposal on how to proceed after the merger. This may
compromise objective verifiability of the takeover process and may increase
CBEs vulnerability to operational risk exposures after the merger.
Mitigation: The action plan may need to address Details of Outstanding
Facilities (LC and Guarantee Facilities) unutilized and utilized portion (if there
is any), their reconciliation with credit and finance teams and preparation and
submission of a Proposal on how to proceed handling them after the merger.
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g. The teams deliverables are not conclusive enough: The last deliverable in the
deliverables section of the action plan is a testing report which is not clear as
to its content. On the other hand; if the team is taking over files and balances
and statuses of active LCs, CADs, etc. from CBB TS process and for some of its
other responsibilities from CBBs CATs process the team should have
considered taking over report as one of its deliverables. Furthermore; pre and
post data migration data verification report and subsequent handing over to
appropriate CBE work unit of accounts and active commitments and
documents the TS Team has been handling should have also been mentioned
among its deliverables. It is reasonable to assume that missing deliverables can
either threaten projects takeover activities accountability and verifiability or
hinder the project from finalizing its consolidation responsibility within the
planned time schedule.
Mitigation: pre and post migration data verification report; if the team is
planning to takeover TS outstanding operations, balances, documents etc.
from CBB and handing them to CBE pertinent work units, the teams taking

over report and handing over to appropriate CBE work unit of accounts and
active commitments and documents the TS Team has been handling may need
to be included among the teams deliverables.
h. There are no updating activities in the teams action plan: after taking over
files and balances as of the cut of date; subsequent updates should necessarily
be captured to account for additions, changes on those cases at the cut of date,
etc. This will take time and its an activity which will last until the
consolidation data. Its absence may result project conclusion to be delayed
and/or consolidation to be unreliable, unverifiable while accountability for
interim period actions can be difficult to establish which by itself has serious
operational risk implications.
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Mitigation: to plan for and incorporate the updating activity in the plan of
action of the team is the straight forward recommendation to handle this risk.
i. The Gantt chart presentation of the action plan states that the last activity of
the plan which is to be done from March 16 to 31 is preparation of a
consolidation proposal: the consolidation plan is not the end by itself.
Considering it as the end result activities after the proposal not to be planned
in advance and hence result the takeover successful completion in doubt.
Mitigation: to plan the implementation activities as per the consolidation
proposal in the teams action plan is recommended.
4.4 Legal Technical Team
The following five Project Risk Implications are identified while we review the action
plan of the Projects Legal Technical Team.

a. Inability to ascertain Availability of relevant Documents of Inactive Cases and
Completeness of Legal Advices: as per the legal team action plan; Inactive
Cases and Legal Advices Provided by CBBs DRLS Process are not going to be
verified for the existence of the documents vis--vis the lists of cases and list of
folders of advice letters which the legal team is planned to take over. The risk
of this emanates from two possibilities. The first is in the unlikely but possible
situation where inactive cases become active missing documents as a result of
the missing document verification activity and hence the ensuing attention they
got during the handing over process plus the luck of accountability for
retaining the contents of inactive case files may cost CBE in the form of lost
cases. As advices are used to execute or otherwise refrain executing a particular
action their implications are profound and hence accountability should always
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be insured at all times. This is the other possibility we should be concerned

about. Particularly; the advice letters issued during the takeover process may
put CBB to perform legally inappropriate actions and subsequently by whom,
when and how advices to that effect are issued may not be traceable.
Mitigation: The team may need to include verification of documents of
inactive cases and ascertaining Completeness of legal advice letters it is going
to take over and hand over to the appropriate CBE work unit as its activity in
its action plan. The project; on the other hand may consider availing the
required human resource for this task.
b. Inability to capture new cases & legal advices in the interim period and new
eventualities on the already captured active/inactive cases: As statuses of active
and inactive cases (although for the latter it is unlikely; if not entirely
impossible) may change during the amalgamation process and as new cases
may occur and new legal advices may be issued; the team's inventory of cases
and their statuses and examined available documentations require due updates
and so is the advice letters issued anew after the team's inventory of same. Not

doing that will ultimately result inconclusive status and document handover to
CBE which may expose CBE to serious legal risk while during the transition
operational risk may threaten to rob CBE from financial resources which
otherwise would have landed in its book of records on the date of the final
consolidation.
Mitigation: Updating procedure may be introduced along with incorporation
of update activity as one of the team's activities in its plan of action so that
status and additional documentations as a result of the legal progress made
during the interim period and as a result of new cases and new advices can be
captured and taken over by the legal team.
c. The teams action plan does not cover the activities of the team right through
the end: Identifying to which CBE organ are cases to be handed over, defining
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the manner of handing over and actually handing over cases and files/folders
to concerned CBE Process, Directorate, Team, District or whatever work unit
as appropriate and applicable is necessary as the teams takeover of
active/inactive cases and legal advice files is not the end of the story in the
amalgamation process as implied by the teams action plan.
Mitigation: Plan revision to accommodate the activities missing from the
teams plan of action is recommended.
d. Proposal for required actions on contracts and Investments to be taken in the
interim period (i.e. prior to conclusion of the amalgamation process) and after
the consolidation is done for those issues identified to require resolution/action
along with defined responsible party for action and mechanism for follow-up
should have been anticipated in the plan: actions which may include money
transfer, correspondent bank accounts, investments, IT contracts, etc. should
be part of the activities and Steering Team approved course of actions should
be monitored and statuses should be followed through until cases are closed
by the team and weekly status report should be tabled to the project office

Mitigation: Proposal for required actions on contracts and Investments to be
taken in the interim period (i.e. prior to conclusion of the amalgamation
process) and after the consolidation is done for those issues identified to
require resolution/action along with defined responsible party for action and
mechanism for follow-up should have been anticipated in the plan
e. A difference in the details and effective date of Council of Ministers regulations
to legally liquidate CBB and to increase CBE's Capital, respectively with actual
consolidation facts: the date of council of minsters regulation for the
liquidation of CBB and its takeover by CBE poses a risk in the event the date of
liquidation is different from the date of actual consolidation. This may result
accounting and legal complications in the aftermath of the takeover process.
The other is that capital increment to CBE as a result of the takeover will be
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known down to the exact cents when and only when the consolidation
process is done and verified which may be the last couple of hours of the final
day of the consolidation. This may present a challenge to get the right amount
of capital increase at the right time for the endorsement of the regulation by
the council of ministers.
Mitigation: Two distinct strategies can be deployed to avoid and perhaps
maximize the capital increment opportunities for CBE. The first is to conclude
the consolidation on the first day of the next accounting year and the other is
to back date the council of ministers two regulations while they are actually
presented for endorsement a day or couple of days after the actual date of
consolidation.
4.5 Branch Rationalization Technical Team

The seven major risk implications we have come across while reviewing the plan of
action that the Branch Rationalization Team has set forth prior to commencing to
discharge its responsibilities in the amalgamation process are discussed here under.
a. Exclusion of CBE Branches taking over CBB Branches from the Branch Grading
Exercise: Branch Grading is considered only for CBB Branches which will
continue operating but not CBE Branches which will take over CBB Branches in
the merger (whether they remain at their current location or move to CBB
Branch Office). This may cause employee job satisfaction and in engagement
to fall.
Mitigation: To extend branch grading to CBE branches which will take over
CBB Branches a result of the takeover is the logical course of action.
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b. Timely Naming and Licensing of CBB Branches to be retained after the

takeover: For those CBB Branches to be retained by CBE; naming and license
issue that need to be acquired and subsequent communication required to be
done (by interfacing with the concerned team) is left unspecified in this or the
rest of the other technical teams of the project. Not anticipating these issues
may either result temporary interaction of branch operation or compliance
breach that NBE may not give a blind eye.
Mitigation: the timely handling of the naming and licensing issue should be
incorporated in the plan of action of the team.
c. Absence of responsible team to conduct Analysis of best alternative course of
action regarding Branch Offices of those Branches to be closed as a result of
the takeover and to propose recommendations and to implement the Steering
Committee decisions afterwards : In case of CBB Branches to be closed as a
result of the takeover; branch office building details, rent contract status vis--
vis the opinion of the legal team on ease of revocability and recoverability of
unused prepayments; alternative use of the office space during the time the

contractual prepayments are exhausted, etc. are not among the activities
planned by this team. As a result; CBE may not take the beat possible cause of
action to optimize its benefits.
Mitigation: the team should incorporate as its responsibility to analyze
alternatives and submit a proposal regarding alternatives as either termination
of contract or recommendation for alternative uses of branch offices for those
CBB branches to be closed after the takeover.
d. Branch Closure/retention decision proposal and Branch grading Proposal are
bundled as a single delivery: the content and depth of the analysis to pass
close/retain recommendations and afterwards what branch grade should be
applied for those branches recommended to be retained are two distinct
outputs with clear logical relationships. Producing the first recommendation
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and get approval will help to ensure convenience for decision making, allow
other teams to proceed because financial consolidation may not depend on
branch grading issues. Thus; bundling deliverables as a single output has its
own adverse effect on the success of the project to meet its scheduled
conclusion date.
Mitigation: Recommendation for closure of CBB Branches by transferring their
records to specifically named CBE Branches can be attempted as a first
deliverable of the team instead of handling it together with Branch Grading
Recommendation which may take time to do the analysis before reaching
grading recommendations.
e. Takeover of rental contracts, files, Cash, etc. and Office Standardization in
relation to CBB Branches to continue operation as CBB Operation are not
included in the Teams Action Plan: Branch Retention requires updating
concerned Processes/Districts to takeover rental contract issues, office
standardization issues, active files, active customer files, security printings,
archive files, etc. which is left unmentioned in this or the rest of the teams

action plans.
Mitigation: branch files, accounts, cash, etc. and standardizing branches to fit in
CBE's corporate design for its branches, etc. do require takeover planning and
implementation which we recommend for this team to include in its plan.
f. Branch Book of Records, files, Cash and other Assets, Security Printings, etc.
takeover by CBE Branches named to takeover closed CBB Branches are not
included in the team's action plan: Branch Closure; besides updating
concerned Processes/Districts, requires updating concerned Branches which are
going to take over the accounts of the branches to handle the taking over of
active files, active customer files, security printings, archive files, etc. which is
left unmentioned in this or the rest of the teams action plans.
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Mitigation: To be closed branches takeover should be included in the team's

plan of action with all the required details of the activities needed to be
handled the closure of these branches.
g. Finalizing Branch Rationalization Proposal , presenting it for review and
approval of the steering team (i.e. presumably) and revising after collecting
feedbacks is assumed to take a single week: Besides the fact that the Steering
Committee role in reviewing and approving the teams final report is not
stated expressly; the rather short time period allotted to the task may have
adverse implication on project conclusion deadline achievement in the event
the plan cannot be achieved with in the allotted time.
Mitigation: it is recommended that this task will require relaxing the assumed
time period it would take to execute the planned task.
4.6 IT Infrastructure Evaluation and

Integration Technical Team

The IT Infrastructure Evaluation and Integration Teams responsibilities and hence its
exhaustive and correctly sequenced planning of activities vis--vis the planning of other
teams which may determine the execution of some of its activities and the successful
accomplishment of the teams planned activities are among the critical success factors the
project needs to focus on. In this report; we have presented our observations from our
review of the Teams action plan necessary in which may escalate in to one or more
project risk implications. Whenever activities of the team are believed to be related with
inputs/outputs of other team(s); our review of the teams action plan is conducted by
relating it with the activities contained in the other team(s) action plan(s) which may
depend on the IT team activity or vice versa.
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a. Products may need to be defined anew in CBEs CBS and consequently

amendments on CBE GL and summery and detail financial statement line
definitions in T24 and other applications producing financial reports should be
preplanned and pre-executed in cooperation with the other teams (particularly
with Finance Team) and the Project Office: products such as special savings
may require new product definition in CBEs T24 CBS so that the product
unique features can be retained after the consolidation process at CBEs
records.
Mitigaton: The IT Team; together with the finance team, should anticipate
setups at CBE applications to accommodate new products which otherwise
could not be handled appropriately in the present CBE product portfolio.
b. One of the teams assumptions in its action plan is that go live data migration
will not wait until full network integration and system audit and security
requirements exceptions will be made: this assumption presents unnecessary
risks to the achievement of project objectives while what forcemajure
necessitates such assumptions are not discussed. Implications due to these

assumptions can be various operational risk exposures during and after the
takeover of CBB by CBE.
Mitigaton: System audit and secutity reuirenent exceptions should not be
made and full. Network integration should be insured to go along go live data
migration.
c. Identification & migration of Financial and non-financial data maintained in
excel, in any other application or in manual records to appropriate CBE
applications are not included among the data migration planning activities of
the team: although the team has stated that even manually maintained systems
will be converted to computerized systems at CBE; the plan of action has
indicated no activity to identify those tasks, determine the data migration
requirement to migrate and convert to CBE computerized systems. Among this
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stock records maintained in an in-house developed application of CBB can be

named as a left over from the planning exercise. Particularly the stock
management system and coding structures should be determined together with
the finance team.
Mitigaton: stock data and other relevant financial and non-financial data
maintained in excel, any other application or manually should be identified
and the manner it will be migrated to appropriate CBE application to handle
the data should be included among the data migration plann of the team.
d. Fixed Assets Record Migration may require among other things the outcome of
revaluation; the outcome of the decisions to relocate the fixed asset items to
existing branches, to head office processes and or to retain them at CBB
branches created as new CBE branches in the merger process which may
determine the coding structure: the issue of fixed asset migration and how the
IT Team will go about it in cooperation with the branch rationalization and
finance teams is not clearly stipulated in the activities included in its action
plan: As discussed earlier this is an important integration issue the IT and

finance teams should workout together. Unless they do so the alloted time for
project tasks may not be adequate enough to handle the tasks the project
expects to be handled.
Mitigaton: Valuation and location related data mapping issues should be
alignex with concerned teams plookan of a tions after of cource handling the
planning issues that may nd to be reeolved as per this risk assessment report.
e. Check and CPOs issued and outstanding may require a clear direction on how
they are going to be handle during migration in to the CBE system: the doubt
here is and when the number of this instruments result duplications in which
case the IT Team needs to come up with solutions to work around this
problem.
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Mitigaton: to determine whether there are such possibilities and if there are
reasonable predictions of such circumstances of reasonable volume then to
come up with a work around solution are the recommended courses of
actions.
f. Migration of Standing Instructions involvement and verification of branches
vis-a-vis credit and finance teams of the project: this is an important task which
may compromise the reliability of the migration process with probably serious
financial quencquences unless verification is done vis-a-vis valid
documentations.
Mitigaton: we recommend planning and executing validity of standing
instructions before and after the migration of standing instructions.
g. Data Migration Strategy Document preparation and Data mapping activities
are planned to require 5 days and 4 days, respectively: this critical and detailed
and on some of the issues require more intuitive thinking are undermined as
can be inferred from the number of days assigned to do these jobs.
Mitigaton: it is advisable to consider the depth and complexity of these

aasignments and come up with reasonanle time estimates to execute these
activities.
h. Network configuration at CBB and CBE data centers to allow CBB branches to
access CBE network which is planned to be done from February 15th to 17th,
2016 may depend on the redesign of the infrastructure: the integration of the
two data centers may expose both the CBE and CBB to security threats which
may outweigh the benefits to be achieved by doing that.
Mitigaton: integration of data centers may be done based on a need analysis
plus deployment of security mechanisms to ensure system Security from both
end of the IT infrastructure.
i. How and when does the team going to address alternative use of DC and DRC
of CBB after the post-merger: the fate of the DC may depend on the decision
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on the fate of the Head Office Building while the same may not be true for the
DRC site at Bishoftu it's fate as a DRC is as uncertain as that of the the DC.
Furthermore; the infrastructure redesign may come up with alternatives for the
steering team's decision regarding these two sites. Unless the level of
investment and its future usescare apperciated by decision makers valuable
resources of CBE after the merger and of course our poor nation may lay
waste.
Mitigaton: The team should consider preparation of a proposal for alternative
uses of CBB's DR & DRC.
j. Taking over backup data of earlier CBB legacy systems (i.e. SmartBank and
Ownsys legacy systems) after ascertaining the Integrity & Completeness of Back
up data is not included in the IT Team Plan: CBB has carried out two
automation transitions within almost the last five years. That means historical
transaction files are av as ikabke only in the backups of these legacy systems. In
order to entertain customers' and third parties' inquires; that is of course in
addition to CBE itself, these backups are going to be called to service. If the

backup data are not complete or the files are corrupt, etc. CBE may face
serious operational risks not to mention regulatory reprimands.
Mitigaton: Completeness and Back up data Integrity of earlier legacy systems
(SmartBank and Ownsys) should be included in the IT Team Plan.
k. Data extraction planned to be done on March 28 presumes stopping bank
operations, pushing the date in CBBs T24 to March 31 st (while the date is still
March 28) or defining the remaining days as holydays to allow data extraction
after close of business at month end: if the assumption we are making are
correct then this should have been expressed as a pre-condition to handle data
migration, migration verification and final consolidation.
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Mitigaton: Project management should have a clear understanding of

underlying asumptions made by any of the project teams such as the
assumption of few days bank holidays.
l. Handing over of the CBB T24 system data which may eventually be referred
as CBB pre-merger legacy system by insuring its integrity as of the exact time
from which data is extracted for final migration to CBE system and
consolidation should be one of the IT Tasks: As CBB will cease to exist after
the consolidation; having records of customers transactions and of course other
internal and partly external transaction records as a back up is very important
not to mention the regulatory reuirements to that effect. Therefore; besides
the operational risks we may associate with the absence of backup and
recovery planning after the takeover; the extent of compliance risk associated
with it, is a very serious concern for anybody not to be bothered about.
Mitigation: CBB pre-merger T24 legacy system data and application should be
verifably retained by insuring its integrity as of the exact time from which data
is extracted for final migration to CBE system and consolidation.

m. Screen Customizations may be considered to handle T24 and SmartBank
account numbers of CBB customers on CBE system: CBB has undergone two
banking software implementations which required clients to remember their
account numbers at least in the most recent legacy system that they have used.
Now that they are going to face yet another change in their account
relationship history; CBE may need to identify them using their past history as
CBB clients and hence that requires customizations on screens starting from the
screens used by CROs. Therefore; the IT team should offer convinces in CBE
T24 screens about which it should plan in advance.
Mitigations: The IT team will need to consider customer service after the
takeover process and should come up with solutions in designing screen
features which are better suited to handle former CBB Customers.
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n. The go live plan is beyond March 31st (i.e. it is in the middle of April) which is
a rather difficult date for handling mergers: the interest update issue is very
convenient if the final migration is done after COB is done at month end (even
better if it is done on June 30th closing) as the interest to be governing
accounts (except special saving accounts) is most probably that of CBEs.
Mitigation: considering the migration simulstion issues and the ultimate
possible convince June 30th offers; it is best to simulate the consolidation up
untill then and finalize it right after year end closing.
o. Creation of users in T24 should be identified as one of the activities the IT
Team should have included in its action plan as part of the go live preparation
after the verification of the consolidation: T24 user creation and acess right
definition are among the major tasks not covered on the IT Team plan of
action. This may affect successful post merger commencement of operations
with customer dI satisfaction implications.
Mitigation: Creation of Ex-CBB users in CBE's T24 CBS should be handled prior
to the go live of operations after the consolidation.

p. Inventory, documentation and verifiable handing ovef of CBB's Customization
done as per CBBs Software Acquisition and Implementation Contract are not
included among the team's responsibilities: there are immense capabilities for
CBE; if and when, it uses the customizations CBB spent countless JR financial
resources to develop. Not accounting then in the takeover process would
mean at of opportunities list for CBE.
Mitigation: CBB's Customization done as per CBBs Software Acquisition and
Implementation Contract should be inventoried, documented and handed
over to CBE.
4.7 Assesment & Placement Technical Team
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The Employee Assessment and Placement Team Action Plan review resulted the below
six Project Risk Implications which we believe should be recognized and mitigation
mechanisms be instituted as soon as possible.
a. Possible Mistakes in capturing CBB employees' Profile: CBB Employees are not
invited to confirm their profile and hence errors and inappropriate placement
which may affect the achievement of CBE Objectives are possible
consequences. Given the expectation of employees in trusting HR to capture
their professional experience and education and training profile and given that
experience dictates reliability and completeness of HR records are of
questionable integrity; employees of CBB may doubt correctness and
completeness of their profile captured by the team. As a result; they may
develop dissatisfaction on their new assignment.
Mitigation: Allow CBB Staff to verify and consent on the correctness of his/her

profile.
b. The competence assessment is on the competence requirement specified for
each job (position) and hence actual facts are not captured: There is no link
between the compilation of staff data/profile & the relationship of competence
& cultural assessments which are done on the basis of collective views about
CBB as institution and for the latter on the basis of competence specification
for jobs not on the basis of competencies of a particular staff occupying a
specific position.
Mitigation: To capture individual competence instead of conclusion of
competence on aggregate bases is recommended.
c. The placement task took only 5 days which may result placement irregularities
and heighted HR Risk: the unrealistic five days period assumed to do the
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placement job of nearly 20 hundred CBB staff in various CBE positions at its
Home Office, Districts and Branches may result a rushed decision making
which may ultimately result inappropriate placement decisions which may be
in the best interest of the bank (i.e. CBE) or the assigned staff of the to be
dissolved CBB or both.
Mitigation: Placement should be seriously executed by giving appropriate
length of time for execution.
d. There is no specified Involvement of the Steering Team in the Placement
Decision or Handling of Complaints by CBB staff regarding Placement
Decisions may result employee dissatisfaction and loss of competent human
resource: Only the Project Director is involved apart from the Projects HR
Team of course in the placement decisions and the Steering Team has no
involvement in the placement task. CBB staff may doubt the whole placement
process and result loss of competent employees.
Mitigation: allow involvement of the steering team on the placement process.
e. There is no adequate time to handle required trainings prior to final

consolidation and there is no post-merger training plan proposal deliverable
expected from HR Team as per its Plan of Action: Training requirements are
not analyzed which may need to be handled prior to or after the end of the
consolidation process. Otherwise; CBE may face operational performance
problems.
Mitigation: the team should incorporate training need assessment and training
plan among its deliverables.
f. Exclusion of Succession Plan Update Requirement: Succession Planning
update; as there may be a need to do that with the influx of experienced staff
with such magnitude which may render the existing plan not to be up to date
in light of the merger eventuality, should have been among the team's
responsibility and hence among its planned activities.
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Mitigation: It is recommended that CBE'S succession plan be revised in li has to

of thus takeover eventuality.
4.8 Orientation on CBE Strategies & Change

Management Technical Team
The following three Project Risk Implications have come to our attention while we
review the action plan of Orientation on CBE Strategies & Change Management Team.
a. Competence and Job Satisfaction Gaps resulting Financial and Human

Resource Loss as a result of Insufficient Change Management Planned
Activities: The planned change management activities we have in the teams
plan is that there will be a change management and Strategy Orientation
sessions (i.e. two days for each sessions) for all CBB employees. The

organizational structure and work flow designs, policies and operational
procedures, systems and system configurations as well as financial and
nonfinancial reports and CBEs MIS should be introduced and be familiarized
with CBB staff in order to do their jobs effectively and efficiently after the
merger. Thus; besides
b. Inadequate Understanding of CBE Strategies affecting the achievement of CBEs
Strategic Objectives as a result of Inadequate Depth of Planned Strategy
Orientations: For all non-clerical, clerical, supervisory, medium and executive
management employees of CBB alike; orientations sessions each stretched for
two days are planned and planned orientations are actually commenced.
Nonetheless the depth of strategic orientations needed to be provided and
areas of focus can be determined
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c. Uncovered Change Management Issues resulting delays in project successful

completion and/or Compliance Breaches and Penalties: the Branches/Sub-
Branches to be consolidated as CBE Branches/Sub-Branches and the Branches
and Sub-Branches to be closed may need to require NBE approval before
doing so. Furthermore; the former may require name changes which should as
well be taught about well before the consolidation process. These names
should be communicated to customers and their names should be displayed in
the standard CBE Logo.
4.9 Communication & Awareness

Creation Technical Team
The following three Project Risk Implications are identified while we review the action
plan of Communication and Awareness Creation Team vis--vis the rest of the project

technical teams Action Plans.
a. Duplication of Activity resulting unnecessarily Increased Project Cost and

Project Implementation Time: The identified duplication is the induction of
CBB Employees which is planned to be conducted from March 17 to 31st, 2016.
On the other hand; Change Management and Strategy Orientation sessions are
planned to be conducted from February 29 to March 31st, 2016 by the
Awareness on CBE strategy and Change Management Team. The induction
activity can be handled as part of the change management and CBE Strategy
Orientation Activity and hence the induction activity can be dropped from
Communication and Awareness Creation Teams activities to avoid this
identified risk.
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b. Wrong Consolidation Effective Date Public Announcement resulting Customer

Dissatisfaction and Tainted Public Reputation: Press release by visiting and
collecting new developments from team leaders or concerned bodies; which is
an activity planned to be conducted from February 1st to March 31st, 2016, may
cause customer confusion, dissatisfaction and reputational damage in the event
we publicly declare a date on which the consolidation process ends and CBB is
officially dissolved and we unfortunately fail to meet that scheduled
consolidation effective date. This risk can be avoided by carefully avoiding
specifying firm consolidation date until the day the project office is certain that
a specific date can be announced as the end of the consolidation process and
effective the next one or two working days customers of CBB can call on
services from CBE Branches.
c. Inappropriate Mix of Communication Medium to Customers to inform them
regarding Change of Names of Retained Branches, Relocated CBE Branches
and Closed CBB Branches (including to which CBE Branch Accounts of closed
CBB Branches are transfered to) & Information on New Arrengements to Ease

Access of Branch Customer Services may cause customer confusion &
dissatisfaction, reputational damage and ultimately loss of customers and their
deposits: An activity to communicate branch Arrengement changes; which is
planned to be conducted from March 17th to 31st, 2016, is anticipated to be
made using Facebook and Twitter (i.e. excluding CBE'S employees' Portal).
Besides the doubt in the effectiveness of the stated communication mediums
given the level of literacy in general and computer ( including social media on
the internet) literacy in particular; the plan did not anticipate Arrengements to
ease customer service particularly on the immediate days, weeks and months
after the date of the consolidation. Such planning misspecifications may cause
customer confusion, dissatisfaction, reputational damage and ultimately loss of
customers and their deposits. This risk exposure can be reduced to tolerable
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levels (if not avoided altogether) by carefully planning the details of

communication activities needed to be done, the timing, frequency, length of
period and communication mediums to be specified to reach customers
effectively as part of the activities of the project. This may better be
accompanied by a proposal to be prepared by the team to be tabled to the
project's steering team as one of the team's deliverables so that CBE can take
up the task after the merger.
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5. Concluding Remarks
The following are few concluding remarks drawn based on our observation on the entire
project set up and planning activities we would like to highlight as possible causes for
one or more project risk implications that we have discussed in the main body of this
report.
a. The project office has arranged for the teams to discuss and workout
integration issues among themseleves. While that is a commendable effort
excersised in a bid to make sure project objectives will be achieved within the
specified time period; it would have been even better if project plan
consolidation is attempted by covering all the detail tasks, determine input
output relationships among activities, clearly defining responsiblities etc. The
implication of the absence of thus attempt can be the cause of some of the risk

exposures we have dealt in the previous chapter of this report. This plan
consolidation can be assisted by project management tools such as micrisoft
project application specifically designed to handle project planning and
performance monitoring tasks more easily.
b. The final consolidation date of the two banks and the ultimate liquidation of
CBB is vulnerable to the length of time a lot of critical tasks may require to
take. Excluding the desirable without blemish sucess story; there are two
opposing sides of possible outcomes in the otherwise unfavorable situation.
The first is the project may extend the consolidation date to a further future
date and do the consolidation tasks as neatly as they can possibly be done and
face an increase in operatioal risk expisures to CBE to the extent of the extra
time it would took to conclude the consolidation or compromise the quality of
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the consolidation outcome and increase post merger risk.implication of the

project to CBE. In any case; the project MN an age mentioned should weigh
the alternatives and come up with contingency plans on how to proceed in the
event planned tasks are critically behind schedule to conclude the
amalgamation as planned.
c. Consolidation of audit reports, building designs, building permits and
contracts, internet and post office contracts, memberships in international
institutions, etc., should be among the activities of the consolidation process.
Finally; the below rather generalized recommendation may be subscribed as an antidote

for most of the project planning related risks discussed in this document although as any
antidote side effects are there to watch over while administering it and hence for that
too remedies to minimize such side effects should be carefully planned and cautiously
executed.
Finalization of the amalgamation of CBB with CBE at the end of the third quarter of

2015/16 appears to be a far more stretched plan which may eventually lead to various
unresolved issues to CBE with quantifiable financial and difficult to quantify losses in
customer and employee satisfaction, reputation, etc. consequences. The obvious
recommendation to minimize that is to relax the planning horizon of the consolidation
process.
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Project Risk Assessment and Risk Mitigation Proposal v.7.1

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Project for the Amalgamation of

CBB with CBE

Report on Project risk assessment

By: Risk management Team

CBE: Commercial Bank of Ethiopia

Report on Project risk assessment and Risk Mitigation proposal

4. Project Risk Implications of Action Plans of Project Technical Teams ................................. 6

4.1 Finance Technical Team .............................................................................................................. 6

4.2 Credit Assessment, Reclassification and Consolidation Technical Team .......................... 14

4.3 Trade Service Technical Team................................................................................................... 17

4.4 Legal Technical Team ................................................................................................................. 22

4.5 Branch Rationalization Technical Team ................................................................................. 25

Report on Project risk assessment and Risk Mitigation proposal

4.7 Assesment & Placement Technical Team ................................................................................ 34

4.9 Communication & Awareness Creation Technical Team ..................................................... 38

Report on Project risk assessment and Risk Mitigation proposal

Report on Project risk assessment and Risk Mitigation proposal

4. Project Risk Implications of Action Plans of

4.1 Finance Technical Team

Report on Project risk assessment and Risk Mitigation proposal

Report on Project risk assessment and Risk Mitigation proposal

Report on Project risk assessment and Risk Mitigation proposal

Report on Project risk assessment and Risk Mitigation proposal

final verification of the financial consolidation to be hardly easy besides

Report on Project risk assessment and Risk Mitigation proposal

Report on Project risk assessment and Risk Mitigation proposal

and subsequent disposal of sensitive stationary and security printings are

Report on Project risk assessment and Risk Mitigation proposal

Report on Project risk assessment and Risk Mitigation proposal

4.2 Credit Assessment, Reclassification and

Report on Project risk assessment and Risk Mitigation proposal

Report on Project risk assessment and Risk Mitigation proposal

Report on Project risk assessment and Risk Mitigation proposal

Report on Project risk assessment and Risk Mitigation proposal

4.3 Trade Service Technical Team

a. Balancing the Difference in Commitments and Margin Accounts by coming up

Report on Project risk assessment and Risk Mitigation proposal

Mitigation: to plan and execute reclassification as per CBE classification of

Report on Project risk assessment and Risk Mitigation proposal

e. Reconciliation of money transfer outstanding receivables awaiting

Report on Project risk assessment and Risk Mitigation proposal

Report on Project risk assessment and Risk Mitigation proposal

4.4 Legal Technical Team

Report on Project risk assessment and Risk Mitigation proposal

be insured at all times. This is the other possibility we should be concerned

Report on Project risk assessment and Risk Mitigation proposal

Report on Project risk assessment and Risk Mitigation proposal

4.5 Branch Rationalization Technical Team

Report on Project risk assessment and Risk Mitigation proposal

b. Timely Naming and Licensing of CBB Branches to be retained after the

Report on Project risk assessment and Risk Mitigation proposal

Report on Project risk assessment and Risk Mitigation proposal

Mitigation: To be closed branches takeover should be included in the team's

4.6 IT Infrastructure Evaluation and

Report on Project risk assessment and Risk Mitigation proposal

a. Products may need to be defined anew in CBEs CBS and consequently

Report on Project risk assessment and Risk Mitigation proposal

stock records maintained in an in-house developed application of CBB can be

Report on Project risk assessment and Risk Mitigation proposal

Report on Project risk assessment and Risk Mitigation proposal

Report on Project risk assessment and Risk Mitigation proposal

Mitigaton: Project management should have a clear understanding of

Report on Project risk assessment and Risk Mitigation proposal

Report on Project risk assessment and Risk Mitigation proposal