Mr Godwin Emefiele, Governor, Central Bank of Nigeria (CBN), has urged risks managers to be vigilant in order to deal with the complex risks the country is currently facing.
Emefiele gave the advice at the 2nd National Risk Management Conference, organised by the Risk Management Department of the CBN in Lagos on Thursday.
He said the country was facing unsettling times and there were more challenges ahead.
The News Agency of Nigeria (NAN) reports that the conference had, ‘Financial System Development and Economic Growth,’ as its theme.
“Indeed, over the past decade, we have witnessed significant changes to the risks in our respective institutions.
“Since the COVID-19 pandemic, our mandates have evolved and this has been complicated by new technologies, increasing cyber and information security risks, rising insecurity, global tensions, global economic decline and a host of other issues.
“Traditionally, financial institutions have predominantly focused on financial risk, but have made efforts in rebalancing over the past decade to strengthen non-financial risk management,” he said.
He, however, said the lines between financial and non-financial risks, had over time, started to blur and that the trend would continue.
He said this was apparent considering increased targeted cyber-attacks on critical IT infrastructure as well as opportunities and risks presented by financial innovation.
“Of course, we cannot leave out what we collectively face in terms of climate change; increasing flooding, desertification, droughts are some of the issues we will collectively have to address.
“We have felt the impact of the recent flooding in Lokoja and other communities.
“It is imperative that we know that the price to pay for not addressing climate change will be high as it affects every citizen, their livelihoods and their communities and this has dire economic and social consequences,” he said.
The apex bank governor also said financial system development played a huge role in promoting economic development through capital accumulation and technological progress, facilitating and encouraging the capital flows, as well as optimizing capital allocation.
He said it reduced poverty and inequality by broadening access to finance to the poor and vulnerable groups, thereby reducing their vulnerability to shocks and helped them increase investment and productivity.
Emefiele, represented by the Senior Director of Programmes, CBN, Dr Angela Sere-Ejembi, advocated proper development and management of Nigeria’s financial system to bring about new opportunities that could lead to exponential growth.
He added that countries with better developed financial systems tended to grow faster over long periods of time.
To prepare for the unexpected, Emefiele said it was important to identify, measure and prioritise risks with some precautionary measures to keep building the financial system.
Dr Blaise Ijebor, Director of Risk Management, CBN, said the conference was a unique opportunity for risks managers to deliberate on the role of risk management in the promotion of financial system development for economic growth.
“I think the time has come for risk managers to go beyond just telling people ‘no, you can’t do this. No, you can’t do that.’ I think we’ve come to a time where we will begin to tell people ‘okay, no, you can’t do that but here’s what you can do.’
“One key area we can help is to begin to come up with ideas on how we can grow the financial system in a way that is sustainable.
“The objective of financial system is usually to reach more people, to create more financial inclusion, create more credit so that organisations and companies can grow and become large corporates and the economy can grow,” he said.
Ijebor was represented Mr Edward Adamu, the Deputy Governor, Corporate Services, CBN.
Mr Joshua Rosenberg, Executive Vice President/Chief Risk Officer, Federal Reserve Bank of New York, said effective management was creating capacity to adapt to unexpected shocks, which was what resilience was about.
“Practically speaking, we have policies, procedures and rules to help us make decisions, but much of the time decisions aren’t clear and it’s organisational culture that shapes the tradeoffs of delay than the actions that we take,” he said.
He, therefore, said learning, listening, speaking-up, working together and building on each other’s strengths were four aspects of culture essential for effective risk management.
Rosenberg, who was guest speaker spoke on the topic, “Things that have never happened before, Happen All the time.”