By BABAJIDE KOMOLAFE
The Central Bank of Nigeria, CBN, has said that risk management practice  is still at its rudimentary stage in Nigeria.

“Although there is noticeable improvement in risk management practices across the banks particularly following the CBN intervention in 2009 and the subsequent reform measures,  risk management practice in the Nigerian financial services industry is still at a rudimentary stage beset by a number of challenges, chief among which is the acute dearth of knowledgeable and skilled risk professionals, particularly at senior level”, said Kingsley Moghalu, Deputy Governor, Financial Sector, Surveillance (FSS), Central Bank of Nigeria (CBN).

He spoke while delivering a paper titled, ‘Risk-Ability: The Importance of Risk Management Knowledge and Infrastructure for Fianncial Services Industry’ at the Chief Risk Officers’ retreat organised by Risk Management Association of Nigeria (RIMAN) held in Lagos.

He said, “Much of the available risk experts appear to be concentrated in certain banks, yet even in these institutions, those with risk experience may not be fully involved in major strategic decisions. This is further exacerbated by the pervasive poor knowledge of risk management by members of the board- of many banks as revealed by the result of the diagnostic study commissioned by the CBN in the wake of the banking sector crisis in 2009. In hindsight, it was apparent that senior management and directors did not appreciate the nexus between their banks’ business strategies and risk appetite and their implication for risk management within the  organization.

He said among the  factors responsible for this dismal state of affairs include, “Dearth of formal training institutions offering risk management curriculum. It is generally observed  for instance, that some risk management practitioners do not possess the requsite formal qualification and technical depth, but merely became risk managegers  “on the fly”.

He said one of the strategies that could be adopted to  address this problem  of capacity gap in the practice of risk management in Nigeria is to  professionalise risk management education in Nigeria through the development of qualification and certification programmes by registered professional bodies and training providers such as RIMAN and Credit Risk Management Association of Nigeria (CRIMAN).

“Considering the identified skills and capacity gaps and the paramount importance of having in place a sufficient pool of skilled talents and risk professionals to drive and support effective risk management in financial institutions, significant attention should be given to the following suggested strategies;

“Establish an accreditation and assessment system for risk management training providers in the financial services industry.

“The Human Resources departments of individual institutions should create an on-going programme to increase the knowledge and understanding of risk throughout the organisation, addressing issues such as risk identification, risk types, risk analysis and measurement, market and economic influences and impact, compliance roles and responsibilities, and lessons from past banking and financial crises.”

“Financial institutions should integrate knowledge management  as part of their capacity development initiatives through  continuous research, documentation and preservation of risk management best practices and the many organizational and industry lessons learnt from various crises.

“Develop a holistic competency framework that addresses critical competency gaps among bankers and supports the development of risk management professionals in the financial services industry. In this regard, it is pertinent to mention that the

Bankers’ Committee is currently developing a competency framework for the Nigerian banking industry which is expected to contribute towards addressing the identified capacity gaps. Establish a talent enrichment program to equip fresh graduates desirous of building a career in the financial sector with the essential technical knowledge and” risk management skills needed to assume professional roles in the financial services industry.