Expert Calls for Proactive Risk Management in Nigerian Financial Sector

By Tosin Clegg

In a sweeping review of Nigeria’s banking landscape, financial analyst and academic Rapuluchukwu Peter Igbojioyibo has advocated for a more proactive and technologically driven approach to risk management across financial institutions. His research warns that weak or inconsistent risk controls could expose organisations to severe, avoidable losses.
The study, examined the impact of key financial risks, including credit, liquidity, and interest rate risks on profitability within Nigeria’s financial sector. Employing advanced statistical tools such as multiple regression analysis, Igbojioyibo found that risk factors have a statistically significant effect on organisational performance, with both positive and negative implications.

“Credit risk remains one of the most pressing concerns for financial institutions in Nigeria,” he stated. “An organisation’s ability to assess and manage the likelihood of default directly influences its bottom line.”

The findings revealed a strong link between non-performing loans and declining earnings, underlining the need for more robust credit assessment protocols. In parallel, liquidity risk often stemming from inadequate cash flow planning was identified as a critical vulnerability that could threaten operational stability.

“Liquidity risk management is not just a compliance issue,” Igbojioyibo emphasized. “It is fundamental to the very survival of financial operations.”
He urged organisations to adopt technology-enabled tools for real-time risk assessment and advocated for stronger enforcement of regulatory standards. The research also highlighted the pivotal role of governance and ethical leadership in ensuring that risk frameworks are not only designed but actively implemented.

While some organisations in the study displayed relatively stable risk profiles, the overall conclusion pointed to a need for improved transparency and routine stress testing across the sector.
“Stress testing should become a standard operating procedure, not a reactive measure. Anticipation of financial disruptions must replace a culture of delayed response,” Igbojioyibo said.
He further noted that investor confidence is closely tied to the perception of sound risk management, framing it not just as a regulatory obligation but a competitive advantage.

“Effective risk control is smart business. It builds trust, secures investment, and safeguards long-term performance,” he asserted.
In the wake of rapidly changing economic realities, the study criticized outdated risk models that no longer reflect the complexities of modern financial systems. Igbojioyibo championed data-driven strategies and continuous innovation as essential tools for navigating future uncertainties.

“Modern banking demands modern solutions. Clinging to legacy systems in a dynamic economy is a recipe for systemic shock,” he cautioned.
His recommendations include ongoing staff training, adoption of international risk management standards, and closer collaboration between academia and the financial industry to bridge knowledge gaps and foster innovation.
“We must demystify risk,” Igbojioyibo concluded. “When financial organisations understand risk better, they manage it better. The aim is not just profitability, but resilience a banking sector that can withstand and adapt to change.”