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Imperatives of managing financial risk for organisational growth

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For leaders in the 21st Century to grow their organisations to greatness, the need to have the capability to navigate in a very risky global village has been underscored.
 
Indeed, for banks and other financial institutions to be globally competitive also, their leadership must be strategically positioned to make a difference.
 
Experts are of the view that understanding and managing risks have become imperative for the success of organisations.
They argued that a banking system that is resilient should have the capacity to support the real economy, and contribute positively to sustainable economic growth and development through the medium and long term.

  
Director, Banking Supervision, Central Bank of Nigeria (CBN), Ahmad Abdullahi, stated this during the 2019 conference and induction ceremony, organised by the Association of Enterprise Risk Management Professionals (AERMP), themed,
“Sustainability, enterprise risk management and compliance: The new imperatives for global competitiveness.”

He noted that a variety of risks confront organisations, and any one of them could threaten organisation’s success, and ultimately lead to a decrease in shareholders’ value.
 
Besides, with an increase in cyber threats, Abdullahi said the need for greater risk awareness by the board and management is pertinent.
 
Abdullahi, represented at the event by one of the bank’s deputy director, E.H. Ezulu, maintained that disruption, innovation, technology, and big data required companies to rethink their business models, core strategies, and target markets.
 
For stronger governance structure and holistic risk management for organisations, he stressed that boards and senior management must have a heightened state of awareness.

He said: “The treasury function will focus on risks emanating from foreign currencies, interest rates, and commodities prices. An organisation’s insurance group will focus on hazard risks such as fire and accidents, while the information technology group would be concerned with security and systems risks.
 
“The accounting and internal audit function focus on risks caused by inadequate internal controls and trends in performance indicators. The executive management would usually have its eyes on the big picture of strategic risks facing the enterprise over its life. “As organisations grow in complexity and serve global markets, the boards’ challenge would be to understand fully how the various organisational units interact and relate, and in turn focus on how the risks cut across the organisation is mitigated.”

 
Undoubtedly, while compliance and risk management are closely aligned, he said both help banks and other entities maintain their soundness, stability, and integrity.
 
He added that while risk management should be viewed as a core competence; and part of everyone’s job whether at the level of setting the organisation’s strategy, or a unit’s objectives, or in running the daily operations.
 
As part of activities to mark the one-week programme was a breakfast roundtable on women in risk management, sustainability and compliance (WINRISC), where the Deputy Director, Asset Management Department, NDIC, Patrick Sanni, charged women that until they take risk, they will never be able to achieve professional success and realise their potential. 
 
“As with everyone, women are exposed to risks; what stands women out of the competition is their large and extremely elastic capacity to absorb shock and manage difficulties,” he said.
  
According to him, when risk crystallises, the impact may be catastrophic, sometimes leading to not only loss of revenue, but also a threat to the “going concern” status of the institution.
 
Sanni suggested different aspects of sustainability to manage risks whenever they manifest.
  
Earlier, President of AERMP, Taiwo Ige, said the theme of the programme was critical, following the conditions of risk management operations, and its impacts on improving organisations to weather storms on risk management.
 
She added that as risk managers, the need to be ethical in dealings and decisions should be top priority based on striving for the best.


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