Risk Management and Corporate Governance Practice Among Nigerian Banks: A Review

Abstract

In this paper, the concept of risk management and its applicability to business operations in Nigeria to raise the banking firm’s performance was brought into sharp focus. We employed three research methodology approaches: descriptive, industry, and economic analysis models in the study to investigate the applicability or otherwise of risk management techniques and corporate governance principles that affect the banking sector’s performance in Nigeria. Findings showed that (1) Nigerian banks indulged in excessive risk-taking and never cared to apply risk management techniques over the years thereby leading to the total collapse of the majority of them (2) Causes of bank failures arising from poor risk management are giving loans without proper appraisal and documentations, giving loans to public (political) office holders with their positions (status) as collaterals, poor corporate governance practice, financing illicit contracts, etc and (3) Banks carry various kinds of risks in their normal business of banking such as lending and borrowing and other financial services activities. We, therefore, recommend that if full applications of risk management techniques and concepts like risk identification, evaluation, control, elimination, minimization, and transfer, embedded in the basic principles of corporate governance and revival of a culture of trust in our society and among bankers and their customers are brought to bear (applied) in the business of banking in Nigeria, the banking sector’s performance will greatly improve thereby raising the economic growth of Nigeria in the years ahead. If your recommendations in the paper are applied to the letter they will reduce, to the barest minimum, corruption and lack of application of risk management techniques and corporate governance in the Nigerian business environment, so to speak.