Operational risk management in emerging markets: A case study of Nigerian banking institutions

This study investigates operational risk management (ORM) practices within the Nigerian banking sector, focusing on the unique challenges faced in emerging markets. ORM has become crucial in the context of Nigeria’s volatile financial environment, characterized by regulatory pressures, economic instability, and rapid technological advancement. The study aims to assess the effectiveness of existing ORM frameworks, analyze the impact of leadership and organizational culture, and explore the role of technological innovations in mitigating risks. The research methodology primarily involves a comprehensive literature review, supplemented by case studies and data analysis. Key findings reveal that while Nigerian banks have implemented both traditional and modern risk management strategies, gaps persist in governance, technological adoption, and regulatory compliance. Leadership plays a pivotal role in embedding a risk-aware culture, while the integration of advanced technologies such as artificial intelligence and blockchain enhances risk detection and mitigation. However, challenges like cybersecurity threats, inadequate infrastructure, and fragmented regulatory frameworks continue to impede progress. The study concludes that for Nigerian banks to establish robust ORM systems, there must be a focus on strengthening corporate governance, promoting cross-functional collaboration, and investing in continuous learning and innovation. The recommendations include adopting integrated risk management systems, fostering industry-wide collaboration, and leveraging technology to improve operational resilience. These strategies provide a roadmap for enhancing ORM practices, ensuring financial stability, and positioning Nigerian banks for sustainable growth in a dynamic economic landscape.