1.1      Background to the Study


Risk management is a critical aspect of the banking sector, particularly in emerging economies like Nigeria, where the financial landscape is characterized by various challenges and uncertainties. In recent years, Nigerian banks have faced increasing pressure to adopt robust risk management strategies to mitigate the diverse risks inherent in their operations. This assessment aims to delve into the effectiveness and adequacy of risk management practices employed by banks in Nigeria, considering the unique socio-economic and regulatory environment of the country. Adigwe, P., & Onwuka, E. C. (2020).

The banking industry in Nigeria operates within a dynamic environment marked by macroeconomic volatility, regulatory changes, technological advancements, and geopolitical risks. Such complexities pose significant challenges to banks in managing risks effectively. Therefore, understanding the strategies utilized by Nigerian banks to identify, assess, monitor, and mitigate these risks is crucial for safeguarding financial stability and ensuring sustainable growth. This assessment will explore various risk management frameworks, tools, and techniques adopted by banks to address credit, market, operational, liquidity, and compliance risks. Akintoye, I. R., & Olumuyiwa, O. E. (2019).

In examining risk management practices in Nigerian banks, it is imperative to consider the regulatory framework established by the Central Bank of Nigeria (CBN) and other relevant authorities. The CBN plays a pivotal role in setting regulatory standards and guidelines aimed at enhancing risk management capabilities within the banking sector. Additionally, international best practices and standards such as those outlined by the Basel Committee on Banking Supervision (BCBS) provide benchmarks for evaluating the adequacy of risk management strategies in Nigerian banks. By analyzing the alignment of banks' risk management practices with regulatory requirements and global standards, this assessment will offer insights into areas of strength and areas needing improvement. Central Bank of Nigeria. (2020).Top of Form

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1.2      Statement of the Problem

The banking sector in Nigeria is exposed to a myriad of risks arising from both internal and external factors, including economic volatility, regulatory changes, cybersecurity threats, and operational inefficiencies. Despite the increasing recognition of the importance of risk management, there is a lack of comprehensive understanding regarding the effectiveness and adequacy of risk management strategies employed by banks in Nigeria. This knowledge gap raises concerns about the resilience and stability of the banking system in mitigating risks and ensuring sustainable growth. Furthermore, the absence of empirical evidence on the relationship between risk management practices and financial performance exacerbates uncertainties surrounding the impact of risk management on the overall health of Nigerian banks. Adigwe, P., & Onwuka, E. C. (2020).

Additionally, the dynamic nature of the banking industry coupled with the evolving regulatory landscape presents ongoing challenges for Nigerian banks in aligning their risk management frameworks with emerging risks and regulatory requirements. Issues such as poor corporate governance practices, inadequate risk culture, and limited technological infrastructure further compound the challenges faced by banks in effectively managing risks. Therefore, there is a pressing need to conduct a comprehensive assessment of risk management strategies in Nigerian banks to identify key areas for improvement, enhance regulatory compliance, and bolster financial stability in the banking sector. Akintoye, I. R., & Olumuyiwa, O. E. (2019).Top of Form

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1.3 Objectives of the Study

The main objective of the study is to examine An Assessment of risk management strategies in banks in Nigeria. Specific objectives of the study are:

  1. 1.  To evaluate the effectiveness of current risk management strategies employed by banks in Nigeria.
  2. 2.  To identify areas for improvement in the risk management practices of Nigerian banks
  3. To examine the impact of regulatory guidelines and technological advancements on risk management practices in Nigerian banks.

1.4 Research Questions

To guide the study and achieve the objectives of the study, the following research questions were formulated:

  1. 1.  To what extent do current risk management strategies employed by Nigerian banks successfully mitigate credit risk, operational risk, market risk, and other relevant risks?
  2. 2.  What are the key challenges and limitations faced by Nigerian banks in implementing effective risk management practices?
  3. How have regulatory guidelines issued by the Central Bank of Nigeria and the adoption of new technologies shaped the approaches to risk management in Nigerian banks?

1.5 Research Hypothesis

The following research hypothesis was developed and tested for the study:

Ho: There is no statistical significant relationship between risk management strategies and banks in Nigeria.

1.6 Significance of the Study

The study is important for many reasons. The following are the major stakeholders this paper through its practical and theoretical implications and findings will be of great significance:

Firstly, the paper will benefit major stakeholders and policy makers in the Banking sector. The various analysis, findings and discussions outlined in this paper will serve as a guide in enabling major positive changes in the industry and sub-sectors.

Secondly, the paper is also beneficial to the organizations used for the research. Since first hand data was gotten and analysed from the organization, they stand a chance to benefit directly from the findings of the study in respect to their various organizations. These findings will fast track growth and enable productivity in the organisations used as a case study.

Finally, the paper will serve as a guide to other researchers willing to research further into the subject matter. Through the conclusions, limitations and gaps identified in the subject matter, other student and independent researchers can have a well laid foundation to conduct further studies.

1.7 Scope of the Study

The study is delimited to Citi Bank, Lagos. Findings and recommendations from the study reflects the views and opinions of respondents sampled in the area. It may not reflect the entire picture in the population.

1.8 Limitations of the Study

The major limitations of the research study are time, financial constraints and delays from respondents. The researcher had difficulties combining lectures with field work. Financial constraints in form of getting adequate funds and sponsors to print questionnaires, hold Focus group discussions and logistics was recorded. Finally, respondents were a bit reluctant in filling questionnaires and submitting them on time. This delayed the project work a bit.

1.9 Organization of the Study

The study is made up of five (5) Chapters. Chapter one of the study gives a general introduction to the subject matter, background to the problem as well as a detailed problem statement of the research. This chapter also sets the objectives of the paper in motion detailing out the significance and scope of the paper.

Chapter Two of the paper entails the review of related literature with regards to corporate governance and integrated reporting. This chapter outlines the conceptual reviews, theoretical reviews and empirical reviews of the study.

Chapter Three centers on the methodologies applied in the study. A more detailed explanation of the research design, population of the study, sample size and technique, data collection method and analysis is discussed in this chapter.

Chapter Four highlights data analysis and interpretation giving the readers a thorough room for the discussion of the practical and theoretical implications of data analyzed in the study.

Chapter Five outlines the findings, conclusions and recommendations of the study. Based on objectives set out, the researcher concludes the paper by answering all research questions set out in the study.




Adigwe, P., & Onwuka, E. C. (2020). Risk management and financial performance of Nigerian banks: The moderating role of board size. International Journal of Economics, Commerce and Management, 8(7), 184-197.

Akintoye, I. R., & Olumuyiwa, O. E. (2019). Risk management practices and bank performance: A study of selected banks in Nigeria. International Journal of Scientific and Research Publications, 9(3), 471-481.

Central Bank of Nigeria. (2020). Guidelines for the implementation of enterprise risk management in banks in Nigeria. Abuja: Central Bank of Nigeria.

Nwaigburu, C. N., & Okoye, V. E. (2018). Operational risk management practices and bank performance in Nigeria: A panel data analysis. International Journal of Economics, Commerce and Management, 6(8), 111-126.