RISK MANAGEMENT PRACTICES ON BANK CO-OPERATE REPORTING IN NIGERIA (A CASE STUDY OF GUARANTY TRUST BANK PLC OGUI ROAD ENUGU)
The nature and role of banks in financial intermediation portray the institution as vulnerable. The primary source of banks fund are deposits from other banks, private customers and other corporate organizations, such deposit, usually short termed are course, legally repayable in full to the depositors on demand in investing the money received.
These deposits amount to 12 to 40 times the risk capital provided by the promoter of the bank depending on internal location policy and regulatory environment.
This study examines the usefulness of adopting systematic methodology for the analysis and control of risk within the banking industry. To accomplish the objective stated above the study will analyze the nature of risk inherent in the Nigeria banking and highlight the existing system for their measurement and control. Commercial banks such as guaranty trust-bank plc will be studied to see how much of risk management procedure are applicable and adopted by the operators in the Nigeria banking industry.
Finally based on the result of the survey and study earned out, recommendation aimed at proper risk management habit and procedures are made.
The recommendation essentially, will deal with risk control techniques as major input for efficient and effective management of bank asset/liability.
1.1 BACKGROUND OF THE STUDY
Risk is inherent in any walk of life in general and in financial sectors in particular. Until recently, due to regulated environment, bank could not afford to take risk.
Banks are exposed to same competition and hence are compelled to encounter various types of financial and non financial risk.
Risk and uncertainties form on integral part of banking which by nature entails taking risks. There are three main categories of risk, credit risk, market Risk and operational risk.
Author has discussed in detail, main features of these risk as well as some other categories of risk such as Regulatory risk and Environmental risk.
Various tools and techniques to manage credit risk, market risk and operational risk and its various component, are also discussed in detail, another has also mentioned relevant points of Basel’s New capital Accord and role of capital adequacy, risk aggregation and capital Allocation and risk. Based supervision (RBS), in managing risk in banking sector.