Banks Urged to Implement Enterprise Risks Management  

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By Peter Uzoho 

The immediate past President/Chairman of Council, Chartered Institute of Bankers of Nigeria (CIBN), Prof. Segun Ajibola, has called on banks in the country to show total commitment towards the implementation of enterprise risk management (ERM) in their respective financial institutions.

He stated that faithful implementation of risk management framework in banks is the responsibility of boards and must be seen and acknowledged as such.

Ajibola said this in Lagos, at his valedictory paper entitled: “Enterprise Risk Management and Bank Performance: The Nexus,” which marked the end of his tenure as the 19th president of the institute.

He said Nigerian banks should as a matter of urgency, review their risk management profile and migrate fully to ERM platform.

He pointed out that the extant risk management template should be subjected to periodic review to align the same with global best practices, addingthat findings had shown that ERM holds major implications for banks’ performance.

The outgone CIBN boss stressed that more integration of enterprise risk management should be encouraged in other financial institutions to facilitate improved performance in financial system.

According to him, regulatory bodies should ensure that banks and other financial institutions adopt ERM framework and also pursue strict adherence to proper implementation and exposure, followed by necessary monitoring and supervision.

“Banks should engage and train all staff on the fundamentals of ERM and develop a team that encourages organisational units, management and employees to become highly involved in the implementation process of their ERM frameworks,”

Ajibola said.

He further said: “Management and staff of banks/financial institutions and other stakeholders are indeed risk management ambassadors for the institutions and should see themselves in that light.

“Due diligence is required in managing the key performance indicators.

Accordingly, banks should continue to engage services of experts in credit, risk management, treasury and foreign exchange management, audit and compliance, domestic and foreign operations, ICT, etc. to minimise the risk on performance,” he noted.

Ajibola however, described ERM as an emerging field both in the corporate and academic environments, saying as a newarea of specialisation, research in the area was still scanty with limited data to comprehensively capture the various aspects of the subject.

“Consequently, deploying primary data together with existing secondary data would undoubtedly add to the robustness of the enquiry in this area.

“It is therefore my wish that further research in this very important field would extend the existing, albeit sparse, body of knowledge by incorporating other variables or proxies that would capture areas such as managerial, hazard and operational risks amongst other.”

Earlier in her remark, the Chairman of the occasion and former Deputy Governor of the Central Bank of Nigeria (CBN), Dr. Sarah Alade, congratulated Ajibola on his successful tenure, saying: “The programme of today is a tribute to your dedication, hardwork and commitment to the institute.”

She described the topic of the programme as timely and important, stressing that the size and complexity of banks and the volume of financial transactions they handle required that they apply an effective risk management techniques and monitor rapidly changing risk exposure.