The online business dictionary defines risk management as the identification, analysis, assessment, control, and avoidance, minimization, or elimination of unacceptable risks.
Over time and in response to several corporate failures, policy makers have postulated that risk management is no longer a business and operational responsibility of management alone. Risk management has been included as a governance issue over which the Board is required to exercise oversight.
This has been entrenched in the Nigerian National Code of Corporate Governance (the “NCCG”) which stipulates that the Board should constitute a committee which will be responsible for providing oversight for risk management related matters within the organization. Specific actions recommended by the NCCG for the Board or the Board risk management committee in exercise of their risk oversight include the following:
a. The committee should meet at least twice every financial year or such number of times as may be appropriate to discharge its duties;
b. Review the risk management policies and framework;
c. Review the adequacy and effectiveness of the company’s risk management and controls;
d. Exercise oversight over the process for the identification and assessment of risks across the company
and the adequacy of prevention, detection and reporting mechanisms;
e. Review the level of the company’s compliance with applicable laws and regulatory requirements
which may impact the company’s risk profile;
f. Periodically review changes in the economic and business environment, including emerging trends
and other factors relevant to the company’s risk profile and those trends which may threaten the
company’s business model, key strategies, future performance, solvency and liquidity and make
recommendations to the Board as appropriate.
It is no longer sufficient for a director to be appointed to the Board based on his/her connections to other Board members. It is imperative that s/he understands the peculiar industry risks that the company is exposed to and be prepared to suggest measures to avert and/or manage the same.
 Part A, Clause 1 (1.9). Clause 11.1.6
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