EFFECTS OF OPERATIONAL RISK MANAGEMENT ON FINANCIAL PERFORMANCE OF SELECTED COMMERCIAL BANKS IN NIGERIA

This study seeks to establish the degree to which banks risk management (credit and liquidity risk) have impacted profitability of Nigerian commercial banks. Commercial banks face a number of risks such as credit, liquidity risk and operational risks. The actual relationship between risk management (credit and liquidity) and banks performance is yet to be settled and researchers do not necessarily split these risk factors into categories while embarking on finding a solution. It therefore creates a necessity to investigate the Nigerian case using current market conditions given that the country is just recovering from a recession which riled all sectors in the country. In analyzing the relationship between operational risk management and performance of Nigerian commercial banks, secondary data from audited financial statement is employed. This ideal for time series and cross sectional data sets. It helps understand the magnitude of the independent variable on dependent variables. Data collection was done using multiple linear regression. Conclusion was made that there is a significant positive relationship between risk management and banks return on equity. This suggests that effective and efficient risk management strategy plays a key role in commercial banks financial performance in Nigeria. To that end, this study recommended that banks need to develop and design a credit strategy that ensures that in event of defaults or bad debts they can still remain solvent.