The President of Chartered Institute of Bankers of Nigeria (CIBN) Prof. Olusegun Ajibola, has called for collective effort on the part of industry stakeholders to develop a strong capacity for risk management.
This, he said would provide the necessary framework to analyse, manage, and control the various risks facing enterprises across the country.
Ajibola disclosed at the 2016 induction ceremony of fellows and associates of Association of Enterprise Risk Management Professionals (AERMP) held in Lagos recently.
The event was titled: ‘Managing Enterprise Risk in a Recession.’
He stressed that risk management requires the collective efforts of all stakeholders and commitment and honesty on the part of every Nigerian.
“We must have a change in our mindset and there should also be a change in the paradigm shift because if we don’t manage risks it will crystallise on us.”
Ajibola expressed confidence that when risks are effectively managed, it would help prevent disasters and promote compliance with corporate governance requirements.
He said: “To manage the risk, banks do buy and sell foreign exchange in the forward and futures market and thus hedge against uncertainties in the movement of exchange rates. Second, banks are inundated with the risks that those they lend depositors money to may not be able to pay back the loan (principal plus interest).
“To manage such risk (called credit risk), the banks ensure that loans are well secured and repayment sources adjudged to be certain, ascertainable and controllable at the point of advancing the loan. The banks also buy into modern day Relationship Management framework to keep the risks under close watch.
“Risk Management is relevant to all organisations whether they are in the private or public sector (such as FIRS), small or large. Indeed, it should form part of the culture of the Organisation as it supports accountability, performance measurement and reward thus promoting efficiency at all levels.
“For meaningful implementation of Risk Management framework, it requires a detailed knowledge and understanding of the Organisation and the processes involved in the Organisation as well.”
In her remarks, the President of the AREMP, Mrs. Taiwo Ige, said the responsibility of managing risks are not limited to the AREMP, regulatory agencies and the banking industry only, but they are extending it to non-banks and enterprises.
“Let them be aware of the needs to manage their risks, look at their processes and find out those processes that will impact negatively on the running of the business, so that it can be proactive about it before it affects the organisation’s bottom line,” noted Ige.