Stress Testing is Essential for Risk Management, Experts Affirm

17 Nov 2012

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By Obinna Chima

Risk Adviser Partner, Ernst & Young, Mr. Ben Afudego, has said that stress testing is important for the entrenchment of risk management in any institution.

Afudego has also advised risk managers in the financial sector to develop sustainable liquidity management strategies for growth.

He gave the advice while speaking at the Ernst & Young’s Strategic Financial Sector event tagged: ‘Financial Services Risk Management’, that was held in Lagos at the weekend.

Afudego noted that liquidity and capital management have impacted on the continuity of many businesses. He added: "Higher capital and liquidity buffers are changing the economics of many businesses. Returns on investment will go down, cost and leverage will be reduced and margins will go up.

“Liquidity is the highest priority for risk management at the moment. Complying with new Basel III and local Liquidity Coverage Ratio (LCR) requirements are driving initiatives to review and adjust liquidity management systems and processes. It should be managed to include both groups and entity level”, he added.

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Tags: Nigeria, Business, Featured, CBN

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