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Capital market: ASHON, IRM task operators on risk management strategy

By Peter Egwuatu

Association of Stock Broking Houses of Nigeria (ASHON) and  a frontline management consulting firm, IRM Professionals, have called on  market operators to    pay attention to various risk management challenges that impact their operations.

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Speaking at a training programme in Lagos, Managing Partner and Chief Executive, IRM Professionals, Mrs Owodunni Yussuff explained that certain risks were peculiar to capital market operations and they should be managed in order to ensure business continuity.

Yussuff stated that the risks were usually classified into business risks and consequential risks, saying that business risks include credit risk and market risk while consequential risks comprises legal risk, liquidity risk, operational risk, settlement risk and reputational risk.

She explained that apart from the technical risks, there are regulatory risks that are currently affecting capital market operators in Nigeria.

“ As part of Minimum Operating Standard (MOS), they are expected to have a risk management function, and a risk manager.   But many of them are not well equipped in the area of risk management department for optimal performance. As of now, many of our operators have not established what we call risk culture.

“ The principal risk associated with a broker dealer or a capital market operator   in Nigeria   is compliance with the rules and   regulations of the Securities and Exchange Commission (SEC), Nigerian Stock Exchange,   NSE, the Investment and Securities Acts (ISA). Capital market operators are obliged to comply with the regulatory rules and regulations in order to avert sanctions with its attendant implications on corporate reputation”, Yussuff said.

Commenting on the imperative of training capital market operators, ASHON’s Chairman, Chief Patrick Ezeagu, explained that the Association had no option than to expose capital market operators to risk management training in view of inherent risks associated with capital market operation.

Ezeagu noted that capacity building would always be on the front burner of ASHON’s activities in order to support global competitiveness of capital market operators in Nigeria.


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