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Corporate organisations in Nigeria have been called upon to adopt systemic and cultural changes to embed risk management into their organisations in a bid to manage uncertainties that may arise at any given time.
The CEO of Financial Derivatives Company Limited, Mr. Bismarck Rewane, stated this in a keynote address at the 17th Annual Conference organised by the Risk Managers Association of Nigeria (RIMAN) in partnership with Heritage Bank Plc and Financial Derivatives Company Limited.
At the conference attended by eminent personalities, including His Royal Majesty, the Oba of Lagos, Oba Rilwan Akiolu, and his council of chiefs as well as Professor Segun Ajibola, President of the Chartered Institute of Bankers of Nigeria (CIBN), among others, Rewane stated that risk advantage is the ability to systematically manage the uncertainty inherent in any given 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 even as he listed the components of the framework as expansive, anticipation, discipline and resilience.
He remarked that regular scenario planning helped to establish expansive anticipation and also hold managers accountable for factoring risk and uncertainty into their planning.
Rewane, whose keynote address was titled: Risk Management for Economic Development and Revenue Diversification, also enjoined corporate bodies to take into account risks taken when reviewing the results achieved because linking risk to human resources and corporate governance builds resilience.
The keynote speaker who looked at risk from a multidimensional perspective but mainly from a policy maker’s perspective noted that the business cycle is a natural economic phenomenon of boom to slow down to bust.
Quoting Matthew Bishop, Rewane defined risk as the chance or probability that things not turning out as expected, adding that risk taking lies in the heart of capitalism and is responsible for a large part of economic growth.
Other definitions of risk he proffered are: profit is the reward for risk taking; risk management is the process of bearing the risk of tolerance and minimizing the risk one does not want and risk is also hedging, diversification and buying insurance.
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 (N1.62 trillion), telecoms (N673 billion) and power (N306 billion) which showed that the industry’s non-performing loans were on the rise and thereby necessitating additional capital raising.
In his welcome address, the President of RIMAN, Mr. Jude Monye, welcomed delegates and participants to the conference with the theme: The Role of Risk Managers in Economic Development and Revenue Diversification. He noted that the global oil crisis has left a bitter taste with most oil producing nations and Nigeria in particular, due to its heavy reliance on oil revenue and non-diversification of its revenue base, among others.
He said RIMAN has been at the fore front of best practice in risk management in Nigeria for more than 16 years, adding that the resolve of the association to ensure best practice in risk management and risk advocacy remains unshaken.
