ASHON, IRM Expose Stock Market Operators to Risk Management Strategies
The Association of Stockbroking Houses of Nigeria (ASHON) in collaboration with a frontline management consulting firm, IRM Professionals, recently exposed market operators to a range of risk management challenges that impact their activities as part of initiatives to promote risk management culture among the capital market operators in Nigeria.
Speaking at the forum in Lagos, the Managing Partner and Chief Executive, IRM Professionals, Mrs. Owodunni Yussuff explained that certain risks were peculiar to capital market operations and they should be managed in order to ensure business continuity.
According Yussuff, the risks are classified into business risk and consequential risk, saying that business risks include credit risk and market risk while consequential risks comprises legal, liquidity, operational, settlement and reputational risks.
She explained that apart from the technical risks, there are regulatory risks that are currently affecting capital market operators in Nigeria.
“As part of minimum operating standard (MOS), they are expected to have a risk management function and a risk manager. But many of them are not well equipped in the area of risk management department for optimal performance. As of now, many of our operators have not established what we call risk culture. The principal risk associated with a broker dealer or a capital market operator in Nigeria is compliance with the rules and regulations of the Securities and Exchange Commission (SEC), the Nigerian Stock Exchange, the Investment and Securities Acts (ISA). Capital market operators are obliged to comply with the regulatory rules and regulations in order to avert sanctions with its attendant implications on corporate reputation”, Yussuff said.
Commenting on the imperative of training capital market operators, Chairmanof ASHON, Chief Patrick Ezeagu, explained that the association had no option than to expose capital market operators to risk management training in view of inherent risks associated with capital market operations.
Ezeagu noted that capacity building would always be on the front burner of ASHON’s activities in order to support global competitiveness of capital market operators in Nigeria.
He said: “ASHON in its own wisdom looked at the deficiencies in the human capital capacities of operators within the industry and found out that with the kind of economy that we are operating, risks are inherent in the business we do. Effective and efficient risk management structure positions stockbroking houses to exist in perpetuity as going concern. Risk changes over time and therefore, tools of identifying and managing risk must change over time and the only way you can ensure that we are prepared to manage risks is to continually train and re-train risk Managers within the Capital Market space.”