The recent economic volatility gives risk management a new focus and eminence. Successful firms are able and willing to effectively integrate risk management at all levels of management process. The purpose of the study is to highlight the importance of effective risk management (ERM) in preventing risk management failure. Risk management failure prevents firms’ from meeting their expectations; thus, results to repeated business and project failures. Although the degree of risk management actions varies among firms; ERM ensures that firms’ attain their corporate objectives. Using the literature, the paper highlights that knowledge of risk management is essential in business enterprises. It describes risk and risk management; explores importance and benefits of ERM to business enterprises; highlights reasons why enterprises manage risks. It also examines failure of risk management, causes of such failures, and how to minimise such occurrence. The author concludes that risk management failures can be categorised into two: operational failure and operators’ failure. The implication for practice suggests that risk management is an integral part of the decision-making process and ERM can improve business performance, thereby minimising possibilities of business failures in Nigeria.
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Corresponding Author
Olajide Solomon Fadun; School of Management & Business Studies (SMBS), Lagos State Polytechnic, Lagos Nigeria; E-mail: sofadun@yahoo.co.uk; Postal address: P. O. Box 572 Isolo Lagos Nigeria. He is also a PhD candidate at Glasgow Caledonian University, Scotland UK; Email: Solomon.Fadun@gcu.ac.uk.
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