Assessment of Risk Management Practices in Nigerian Investment Banks and Securities Firms

Investment banks and securities firms in Nigeria operate in a high-risk environment characterised by capital market volatility, counterparty exposure, and regulatory complexity, yet their risk management practices are insufficiently examined in professional literature. This study assesses the risk management practices of Nigerian investment banks and securities dealing firms registered with the Securities and Exchange Commission. A professional assessment design was adopted, with primary data collected from 85 risk officers, compliance professionals, and executive management staff across twenty registered capital market operators in Lagos, Abuja, and Kano. Risk management practices were evaluated across market risk, counterparty credit risk, operational risk, and regulatory compliance risk dimensions. A structured assessment questionnaire and risk management maturity scoring matrix were employed. Results indicated that market risk management practices were the most developed (mean maturity score: 3.4 out of 5), while operational risk frameworks were the least mature (mean score: 2.2). Counterparty credit risk monitoring was inconsistently practised, with 55% of firms reporting no formal counterparty exposure limits. Regulatory compliance risk management improved markedly following the Securities and Exchange Commission's enhanced reporting requirements of 2021. The study concludes that risk management maturity in Nigerian capital market operators is uneven and recommends the Securities and Exchange Commission introduce mandatory risk management certification requirements for all licensed capital market operators.

Keywords: risk management, investment banks, securities firms, Securities and Exchange Commission, Nigeria