1. ANALYSIS OF BANKING RISKS AND THE ROLE OF
INSURANCE INDUSTRY FOR NATIONAL
DEVELOPMENT
SUNDAY C. NWITE Ph.D, ACII, ACIB, IRDI
SENIOR LECTURER
DEPARTMENT OF BANKING AND FINANCE
EBONYI STATE UNIVERSITY – ABAKALIKI
AND
ALIO F.C

2. DEPARTMENT OF BANKING AND FINANCE
UNIVERSITY OF NIGERIA - ENUGU CAMPUS
PHONE NO: 080-37743134
E-MAIL: nwitewhite2006@yahoo.com
ABSTRACT
Banks are among the financial institutions that exist in our economy.
The banking industry mobiles funds from individuals, households and
corporate organizations. The money mobilized, part of it are always
extended to borrowers with interest. This is the major ways banks
make their profit. There are various activities of banks like giving out
loans, leasing, ownership of property, vehicles, project financing etc.
there are a lot of risks that are exposed to their activities like interest
rate risk, volatility risk, inflation risk, risk of failure to pay debt, delay
in payment of debt and sometimes government makes some policies
against the bank which is a risk. These risks affects the performance
of banks. The insurance industry on its own acts as a shock absorber

3. by providing covers/polices to ensure adequate protection. It has
been found that banks activities involves a lot of risks both
systematic and unsystematic risks and that insurance industry
provides some policies like fire insurance, theft insurance, legal
expenses insurance, credit insurance, fidelity guarantee insurance. It
is concluded that the banking risks need to be managed through
insurance policy mechanisms. The implication is that banks are very
volatile and if these risks are not property managed, may cause
problems to these banks which can result to distress and distress
may lead to total failure. Recommendations were made that banks
should use the insurance industry to manage their risks and also
receive insurance advise to help reduce the risks exposed to them by
taking adequate insurance policies.
KEYWORDS
Hazards, perils, risks, volatility, interest risk, credit risk.