The Risk Management Association of Nigeria and economic experts say creating buffers for the economy is a sure economic strategy to preventing risk crystallisation, which they describe as having serious consequences on the populace.
They noted that the economic challenges facing the country could be linked to failure by successive governments to diversify the revenue base from oil.
RIMAN members and experts spoke at the association’s 17th annual international conference and training in Lagos.
The two-day event with the theme, “Risk management for economic development and revenue diversification”, was sponsored by the Central Bank of Nigerian, Nigeria Deposit Insurance Corporation, and commercial banks.
RIMAN provides the platform for sharing of ideas, scenario analysis and discussions that are centred on risk mitigation and national economic development.
Describing risk as the probability that something unpleasant or unanticipated may happen, the guest speaker, Mr. Bismarck Rewane, who is the managing director/chief executive officer of Financial Derivatives Company Limited, said as the economy was growing bigger, there was the need to learn from the mistakes of the past.
Rewane said, “Economic cycles are natural, we need to accept that. We need to accept the risks that are attendant with cyclical movement. But what do we do about it. It is not enough to identify the risk; but have we learnt our lesson from the event of the past?
“So, global risks are there but not much can be done about them, but we need to insulate ourselves with buffers, capital and all the other buffers to reduce the shock.”
He added, “We must learn from the lessons of the past so that we don’t repeat those mistakes because the economy is getting bigger and the consequences of risk crystallising on everybody and the victims of these are much more than they’ve been in the past. So, we have to be more proactive because we have a more robust system.”
The FDC boss charged risk managers and practitioners at the event to be aware of risks and how to tackle them.
According to the President/Chairman of Council, Chartered Institute of Bankers of Nigeria, Prof. Segun Ajibola, who was also at the event, failure to take proactive measures to address the challenges facing the nation had contributed to the crystallisation of the risk of security, food insufficiency, social and political upheavals, corporate failures, among others.
While commending RIMAN for organising the forum, the CIBN president noted that the banking business terrain was currently being disrupted by the emergence of financial technology.
The Chairman, Board of Trustees, RIMAN, Ms. Folakemi Fatogbe, spoke on the management of risk arising from economic activities by the CBN in conjunction with RIMAN.
These, she noted, could be done through mitigation strategies, namely risk identification, analysis, measurement, scenario planning, among others.
According to her, there is the need to talk about dealing with concentration of risks as clearly shown in the country’s mono-product economy.
The President, RIMAN, Jude Monye, said the economic recession suffered by Nigerians could be linked to government’s failure to embark on economic diversification on time, adding that getting out of it would not be easy.
The Chief Executive Officer, RTC Advisory Services, Opeyemi Agbaje, who spoke on “Imperatives of revenue diversification in a challenging economic environment,” said until the government revenue base was diversified, economic problems would persist.
Agbaje explained that the current economic structure was unsustainable, saying that government’s objective should be to reduce the contribution of oil to the economy significantly.