The Central Bank of Nigeria (CBN) has concluded plans to introduce a new risk management framework known as the macro-prudential risk framework for effective management of risk in the financial sector, particularly in the banking industry, this year.
CBN Deputy Governor, Financial System Stability Kingsley Chiedu Moghalu, who spoke at the Chief Risk Officers of Banks retreat in Lagos yesterday said so far, banks have in the past concentrated on only one form of risk – credit risk, but revealed that the prevalent risk was actually the macro-economic risk.
He explained that this particular risk is caused by the outcome of macro-economic policies. For instance, he said since Nigeria is a one commodity economy, any drastic change in oil price could set a chain reaction that would affect the financial sector.
He stressed that risk was not all about credit, but there are lots of variables that pose as risk to the financial system, saying, “Whether we like it or not, there will always be a bubble burst in every 20 years”.
Moghalu said the central bank was in the process of recruiting a team of specialists in a bid to make risk supervision more effective.
As for the banks, he said it has become pertinent that their board members have a reasonable knowledge of risk management so that decisions taken by them will be informed ones.
Going forward, the deputy governor also stressed? the need for cross-border collaboration to douse concerns about off-shore operations as well as enhance seamless risk management. Already, he said there was a kind of collaboration within the West Africa sub-region on risk management.
Moghalu said the professional risk management in the country should set a qualification standard for intending practitioners, engage the regulatory bodies in discussion on how to create acceptable standards, establish accreditation and assessment system.
On the part of the central bank, the deputy governor said works were in the pipeline to organise a competency framework workshop very soon.