Impacts of Operational Risk Management on Financial Performance:A Case of Commercial Banks in Nigeria

Olajide Solomon Fadun and Diekolola Oye
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Olajide Solomon Fadun: Department of Actuarial Science and Insurance, University of Lagos, Lagos, Nigeria
Diekolola Oye: Department of Actuarial Science and Insurance, University of Lagos, Lagos, Nigeria

International Journal of Finance & Banking Studies, 2020, vol. 9, issue 1, 22-35

Abstract: Increase in losses borne by banks as a resultofinadequate operational risk management practices and the adverse impact on banks’ financial performance has been a major concern to bank management and regulators. Hence, the purpose of this study is to analyse the impact of operational risk management practices on the financial performance of commercial banks in Nigeria. 10-years (2008 -2017) secondary data extracted from audited financial statements of selected commercial banks in Nigeria was used for the study. The data was analysed using the Linear Multiple Regression Model. The results showed that there is a positive relationship between operational risk management and the financial performance of banks. The findings revealed that sound operational risk management practices impact positively on the financial performance of banks. We, therefore, recommend that banks’ management should deploy adequate resources towards understanding operational risk to ensure sound operational risk management and improved financial performance of banks. The study isbased on a limited scope; therefore, a larger sample size may make for an interesting research in the future.

Keywords: operational risk; risk management; commercial banks; financial performance (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (2)

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