A Dissertation Submitted in Partial Fulfillment of the Requirements for Award of the Degree of Master of Business Administration (MBA) of Mzumbe University. 2014The main objective of this study was to assess risk management practices used by commercial banks in Tanzania. The study used both second and primary data in both qualitative and quantitative techniques. The study used both stratified and purposive sampling techniques. Primary data was collected through interviews, observation and questionnaires from six bank employees and administrators. The banks involved include NMB Bank, CRDB Bank, BACLAYS Bank, NBC Bank, EXIM Bank and DTB Bank. For Secondary data, the study used documentary review. Data was collected during the month of July, 2014 using the questionnaires which were distributed to 100 respondents. Of these 80 respondents returned the questionnaires, giving a respondent rate of 80 percent. The study indicates that commercial banks continue to find it difficult to manage risks, as most commercial banks appear to be caught in a vicious cycle that moves between rapid growth in the ‘good’ times and virtual standstill when a crisis hits back. Findings indicate that all focused banks do constantly apply risk management procedure for example; risks mitigation manuals, proper monitoring and supervision of banking operation. The findings further concluded that risk management policy, employee involvement and management practice have significant effect on the risk management practice in commercial banks. But also, the findings showed that profitability has weak significant influence on the risk management practice. Based on the foregoing findings; it is recommended that mutual understanding is needed so that, all parties should speak a common language and communicate more effectively. Business executives should be positioned to assess their company’s enterprise risk management process against a standard, and strengthen the process and move their enterprise toward the established goals. Future research can be leveraged off an established base. Legislators and regulators will be able to gain an increased understanding of enterprise risk management, including its benefits and limitations. With all parties utilizing a common enterprise risk management framework, these benefits will be realized.