The evolving trends in business and financial transactions have necessitated the need for regular update in modern risk management, besides adopting the practice as corporate strategy.
Heritage Bank Plc, Risk Managers Association of Nigeria (RIMAN), and Financial Derivatives Company Limited, were unanimous in the call for corporate organisations to adopt systemic and cultural changes that would embed risk management in their operations in a bid to manage uncertainties that may arise at any given time.
The Chief Executive Officer, Financial Derivatives Company Limited, Bismarck Rewane, at RIMAN’s 17th yearly conference organised in partnership with the bank, said risk advantage is the ability to systematically manage the uncertainty inherent in a strategic position in order to generate an attractive return with less risk.
He said the Boston Consulting Group (BCG) risk advantage framework could be used to establish competitive strength in an age of uncertainty and that the components of the framework are expansive, anticipation, discipline and resilience.
Rewane pointed out that regular scenario planning helped to establish expansive anticipation, and also hold managers accountable for factoring risk and uncertainty into their planning.
The expert enjoined corporates to take into account risks identified when reviewing the results achieved because linking risk to human resources and corporate governance builds resilience.
He remarked that economies were vulnerable to both exogenous and domestic shocks as they go through business cycles, noting that in the last 100 years, there have been no less than 14 recessions, one depression in 1929, and at least two times when economic, financial and market crisis happened.
Rewane noted that a stress test of the Nigerian banking industry presently would measure exposure to oil and gas (N1.62trillion), telecoms (N673billion) and power (N306billion), which showed the industry non-performing loans were on the rise and thereby necessitating additional capital raising.
The President of RIMAN and Executive Director of the bank, Jude Monye, welcomed delegates and participants to the conference with the theme: “The Role of Risk Managers in Economic Development and Revenue Diversification.”