A study on the impact of risk management practices on the performance of financial organizations in Nigeria

The banking industry depends on risk management to identify, assess, and mitigate risks to financial performance and stability. The Nigerian banking sector has expanded and encountered several challenges, making risk management a primary priority for commercial banks. This study looks at how risk management approaches impact the financial performance of Nigeria's top five commercial banks—Zenith Bank, GT Bank, UBA, FBN, and Access Bank—from 2013 to 2023. The quantitative study relies on secondary data from selected banks' financial filings. Risk management strategies (capital sufficiency, asset quality, liquidity, and bank size) and financial performance (return on assets) were investigated using descriptive and inferential statistical approaches, such as correlation and multiple regression analysis. The findings of the study reveal that capital adequacy and liquidity have statistically significant positive effects on return on assets (ROA), suggesting that banks with stronger capital positions and higher liquidity levels tend to have better financial performance. Bank size also has a statistically significant positive effect on ROA, indicating that larger banks tend to benefit from economies of scale and have better profitability than smaller banks. However, the impact of asset quality on ROA is positive but statistically insignificant, suggesting that the effect of credit risk management on bank profitability may be less pronounced than other risk management practices. The study also finds that the selected banks have varying levels of risk management practices and financial performance over the study period.