The Governor of the Central Bank of Nigeria (CBN), Mallam Sanusi Lamido Sanusi, has asked banks to commence awareness campaign on risk and exposure to customers and key stakeholders. Sanusi make this call in Abeokuta, Ogun State last weekend at the Annual Conference and Retreat of the Association of Corporate Affairs Managers of Banks (ACAMB). The CBN governor said the awareness campaign would give customers an appreciation of risk in the industry, reduce public anxiety and help improve the health of banks. “Banks should begin to talk about risk and risk management. Some of the benefits of risk communication include improved collective and individual decision making. Both the purpose of the exchange and the nature of the information have an impact on the benefits. Depending on the situation, depositors and public anxieties about banking system health can be reduced or increased,” Sanusi said. The CBN governor said banks must communicate risks to customers and other stakeholders including employees and investors through internal and external awareness campaigns, increased disclosure in financial statements and training. Sanusi had made full disclosure by banks one of his cardinal programmes on assumption of duty on June 4, 2009. He said this would help to provide adequate information about banks and increase confidence in the sector. “Risk communication refers to the idea that people are uncomfortable talking about risk as they tend to put off admitting that risk is involved, as well as communicating about risks and crises,” Sanusi said. He added that risk communication could also be linked to crisis communication. In his paper titled “Risk Management as the Panacea for Preventing Systemic Image Crisis in the Nigerian Banking Industry”, the CBN governor said banks would need to imbibe and practise the seven cardinal rules of risk communication as propounded by Vincent T. Covello and Frederick H. Allen. He said: “They are accepting and involving the public as a legitimate partner; planning carefully and evaluating the banks efforts; listening to the public's specific concerns; being honest, frank, and open; coordinating and collaborating with other credible sources; meeting the needs of the media and speaking clearly and with compassion.” He warned that banking is not just about deposit mobilisation and lending, saying it is more about managing loans and other assets created from the pool of deposits. He said that Nigerian banks have taken banking for granted and this is the time to realise that it is a serious and solemn business that demands the highest sense of diligence. “Banking is about risk analysis and strategic placement of funds to enhance maximum returns at minimal risk. It is not about “my balance sheet is bigger than yours” or “I am the fastest growing bank,” he said. Sanusi stated that Nig-erian banks would, as a matter of urgent operational importance, need to engage the services of competent Chief Risk Officers (CROs) who should report directly to the board through the MD/CEO. He said: “As the banks grow bigger and go international, they are increasingly taking on several risks that they have not been familiar with before now. This explains the reason why the ability to manage cross border regulatory risks, currency risks, financial market risks are strange to most of them. Skills development in these areas will be critical going forward. Most banks will have to overhaul their risk divisions in order to help them evaluate and manage the various risks they face in the deployment of the huge resources at their disposal. “On our part as regulators, we shall continue to evolve and deploy more robust and risk sensitive supervisory framework in line with global best practice to proactively supervise the banks and their non-bank subsidiaries in order to nip potential crisis in the bud. The near future will see greater collaboration among the financial sector regulators and supervisory agencies. “We are already working with the Securities and Exchange Commission (SEC), the Nigerian Stock Exchange (NSE), Nigeria Deposit Insurance Corporation, Nigeria Financial Intelligence Unit and National Insurance Commission on inter-agency cooperation on the implementation of consolidated supervision for the banking sector.” Source: Thisdayonline.com