Heritage Bank Plc, Risk Managers Association of Nigeria
(RIMAN) and Financial Derivatives Company Limited have called on corporate
organizations 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.
At the 17th Annual Conference organized by RIMAN in
partnership with Heritage Bank Plc was attended by eminent personalities which
included His Royal Highness, the Oba of Lagos, Oba Rilwan Akiolu and his
council of chiefs and Professor Segun Ajibola, President of the Chartered
Institute of Bankers of Nigeria (CIBN) among others.
CEO of Financial Derivatives Company Limited, Mr. Bismarck
Rewane stated this in a keynote address, remarking 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 and that the components of the framework are 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 them 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 perspective noted
that the business cycle is a natural economic phenomenon of boom to slowdown 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 s 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 the industry non-performing
loans were on the rise and thereby necessitating additional capital raising.
In his address of welcome, 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.
According to him, 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
remain unshaken.
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