Analysis of Impacts of Operational Risk Management Practices on Banks’ Financial Performance: Study of Selected Commercial Banks in Nigeria

Abstract

Increase in losses borne by banks as a result of inadequate operational risk management practices and the adverse impact on banks’ financial performance has been a major concern to bank management and regulators. This study analysed 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.