Risk Management In Nigerian Banks: A Case Study Of Union Bank Uyo

Project and Seminar Material for Accountancy / Accounting

Risk Management In Nigerian Banks: A Case Study Of Union Bank Uyo

Chapter One


1.1 Background Of The Study

For bank to be standard it must undertake investments it shows that the decision taken on portfolios management, specify accurately a unique sequence cash flow cannot be forecast accurately as it subjected to the occurrence of future events.

This determine the probability element in decision making, therefore risk arises in investment evaluation because occurrence of the possible event with certainty and consequently can not make any correct prediction about the cash flow system, much has been said in literature as performance of union bank. I will first attempt to bring the subject matters (Risk management in Nigeria banking institution).

Pandey (1981) defines risk as the potential hazard of the variability that is likely to occur in the feature returns of a project, he sees the project as being little risk free or highly risk. An investment in treasury bills for example has little or no risk associated with the, it is for this, has the very interest payable treasury bills is very or comparatively low. The interest paid on the investment in sick or share ranks higher than that of treasury bills because of the level of uncertainty of variability of feature returns.

Measurement of different method that is commonly used in the level of uncertainty of variability of feature returns standard deviation and co-efficient of variations, while conventional techniques used to measure the risk of the pay back period risk adjusted, discount rate, certainty equivalent, statistical method like probability assignment standard deviation and co-efficient of variation are also applicable in the management of risk.

Nwankwo, in the year 1999, he wrote a book on bank management principle and practices which appreciate the existence of the risk and need’s to be manage effectively. He defines risk as the possibility of loss injury, occur and in his estimation, risk is the main issues in business of banking, he classified risk into two categories.

They include:

  1. Fraud Risk
  2. Market Risk
1. Fraud Risk:

Fraud is deliberately deception or checking or unlawful gain by stealing, deceitful way, defrauding and embezzlement in spite of all these issuances schemes which is recently set up the federal government (NDIS) Nigeria Deposit insurance schemes, this form of risk is responsible for the case of bank failure so far witnessed Nigeria Banking system today.

2. Market Risk:

Market risk is defined as transaction risk, which occur in form of an interest rate risk, earning risk, liquidity and foreign exchange risk.

Nwankwo went further to discuss risk management of risks.

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