OPERATIONAL RISK AND PERFORMANCE OF LISTED DEPOSIT MONEY BANKS IN NIGERIA: MODERATING EFFECT OF RISK MANAGEMENT COMMITTEE STRUCTURE

ABUBAKAR, Mohammed Babakatun
Department of Business Administration
College of Business and Management Studies
Kaduna Polytechnic, Kaduna
mba4949@gmail.com
MUSTAPHA, Nmanda Mustapha
Department of Business Administration
Federal Polytechnic, Bida, Niger State
KAMBAI, Mathew Pius
Department of Business Administration and Management
Federal School of Statistics, Manchok, Kaduna State
ABSTRACT
The study examined the moderating effect of risk management committee structure on the relationship
between operational risk and performance of listed deposit money banks in Nigeria using panel data
obtained from the annual financial statements of 16 listed deposit money banks in Nigeria from 2018-2022.
An ex-post facto research design was used. Generalized Least Squares (GLS) method of Panel Regression,
Fixed and Random Effects was employed in its estimations with the aid of STATA Software Version 14.
Performance was proxied by Return on Assets (ROA), operational risk was proxied by cost income ratio
(CIR) while the moderating variable, risk management committee structure was proxied by risk
management committee size, risk management committee composition and risk management committee
meetings and bank size is the control variable. The study found that operational risk has significant negative
effect on performance of listed DMBs while risk management committee structure (RMCS, RMCC and
RMCM) moderate the effect of operational risk on performance of listed DMBs in Nigeria. The thus study
recommends that boards and managements of deposit money banks in Nigeria should on annual basis,
estimate likelihood of operational loss event occurring and its potential effect on banks’ performance and
institute effective internal reporting practices that are in line with the scope of operational risk defined by
Nigeria banking industry while considering risk management committee structure in order to mitigate
negative effect of operational risk on banks performance.
Keywords: Deposit money banks, operational risk, performance, risk management committee structure