Risk as we know it, is an action taken with varied and unlimited certainty, when applied in the course of lending several options and end points are obtained.

Why do you lent?

As bankers we lend to fill the gap created from those having deficit to those having surplus, but at a profit.

In the course of lending, several things have to be noted, investigated, amitiorated and controlled, ranging from industry risk, credit risk, price risk, micro economic instability, fluctuation in govt policy, globalization etc.

In chapter one of this study, we shall attempt to introduce the concept of risk and illusidate on its core and periferials.

Chapter two comprise of the literature review whereby we shall by to harmonize past and present data/events as regards to risk as expanciated by several leading authors and authorities.

Chapter three comprises of the made made at which the questionnaires were distributed, oral & written interview carried out and mode at which information were sourced.

Chapter four is a theoretical frame work, going by the result of three and backed up by literature review of two, we obtain an inmate theory as per risk with regards to the best possible method, technique, criteria, methodology of handling risk and we now apply such in the practical sense or various credit request made in the banking sector.

Chapter five borders on the outcome of the application of the theory, the gliches observed and the recommended solutions towards a best possible and in order to safeguard bank fund and equally not render ourselves (i.e the credit officers) liable for professional negligenceincompetence, which may have dial consequences.

CHAPTER ONE

1.0 INTRODUCTION

1.1 BACHGROUND OF THE STUDY

Banking can be aptly described as a high-risk business. For this reason a lot of attention is directed at risk management in banking. The need of such emphasis on risk management becomes even more urgent as banks go apple with large volumes of non-performing assets. This thinking is shared by Rose (1987:54), who points out that while the 1950s focused on techniques for the management of banks assets and the 1960s and 1970s emphasized liability management banking in the eighties was concerned with risk-how to measure risk and how to control risk for the betterment of banks and its customers. This view of risk remains true and on issue for bank management in the lending functions.

It is obvious that the subject matter of “risk” assume considerable importance in determing business success and failures, especially in banking of course, the conventional approach to appreciating that fact in financial management is often linked to inverse between the plausible business outcomes, a high risk heads to more profit value and vice versa.

In banking strictly speaking, we can extend this argument to imply that the more a bank achieves and retains liquidity (less risk) the less it gains in profitability (less returns).

Unfortunately, Uncertainty-another variable also affects business outcomes is not easily understood as in the case of ‘risk” yet we must reckon with the decisive dicey and irrational subjective chances, what do we exactly mean by the term “risk” and “uncertainty”? The answer to these questions forms the basis for the discussion of the overview, which comprise of impact and implications of the term for bank management.