Dr Olayemi Michael Cardoso, acting Governor of CBN
Risk management non-negotiable now, CBN Governor warns directors
Central Bank of Nigeria, CBN, Governor, Dr. Olayemi Cardoso, has advised company directors to place risk management at the core of corporate governance, warning that the stability of Nigeria’s financial system depends on how effectively boards respond to stricter regulatory expectations.
Speaking at the induction ceremony for new members of the Chartered Institute of Directors Nigeria (CIoD) in Lagos, Cardoso stated that the post-recapitalisation era requires a shift from passive oversight to active stewardship. Directors, he said, must anticipate and manage risks in an increasingly complex financial environment.
His remarks follow the conclusion of the latest banking sector recapitalisation exercise—a reform aimed at strengthening resilience, boosting investor confidence, and positioning institutions to support long-term economic growth.
Cardoso stressed that recapitalisation alone will not guarantee stability unless matched by robust risk governance frameworks at the board level.
He described the introduction of Risk-Based Capital Requirements as a defining policy shift, noting that capital adequacy will now be measured not just by size but by how well it aligns with an institution’s risk profile.
“The era of regulatory forbearance is over,” he said, urging directors to take full responsibility for compliance and to embed risk awareness into strategic decision-making.
He outlined key board expectations: stronger oversight of credit, market, and operational risks, and ensuring that capital planning reflects both current exposures and emerging threats. Directors must discourage reckless lending and avoid excessive risk-taking that could undermine financial stability.
Cardoso cited recent regulatory interventions to underscore the consequences of weak governance. He recalled the dissolution of three banks’ boards and management in 2024 over governance lapses, as well as actions taken during the 2009 banking crisis triggered by insider abuses and poor board oversight.
“These episodes reinforce a consistent lesson: where governance fails, the regulator must act to protect depositors and the wider economy,” he said.
To strengthen board accountability, Cardoso highlighted tighter rules on insider-related lending, enhanced disclosure requirements, and stricter “fit and proper” criteria for directors. He added that succession planning directives and mandatory board evaluations aim to prevent leadership gaps and improve continuity.
He maintained that the new regulatory framework is not punitive but enabling, providing directors with tools for disciplined, forward-looking stewardship. Their roles, he emphasised, extend beyond boardroom formalities to safeguarding institutional integrity and rebuilding stakeholder trust.
“Directors must act as custodians of stability in a period of elevated regulatory scrutiny and rapid economic change,” Cardoso said, noting that the banking sector’s central role means governance standards must reverberate across all industries.
Also speaking, CIoD President Adetunji Oyebanji urged members to move beyond ceremonial participation and play a more active role in shaping Nigeria’s economic trajectory.
Membership, he stressed, goes beyond prestige—it is a dynamic platform that gains strength from members’ intellectual contributions.
“The value of your membership is not a static benefit; it is a dynamic ecosystem. Its strength depends entirely on the intellectual and professional energy you invest back into the Institute,” Oyebanji said.
He explained that the Institute serves as a strategic bridge between the private sector and government, amplifying members’ concerns on industry trends and regulatory frameworks through structured engagement with policymakers.
“Through our institutional framework, your individual concerns regarding industry trends or regulatory models are amplified. We engage with government and regulatory bodies on your behalf, providing a form of professional insurance that protects the integrity of your vocation and the stability of your business,” he added.
Oyebanji cautioned, however, that the Institute’s relevance to national development depends largely on active member participation, not financial contributions alone. “For the Institute to remain important in national development, it requires more than your subscription; it requires your intellectual capital,” he said.
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