The role of managerial accounting in managing operational risks: A case study of UAC Nigeria Plc
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Background of the Study
Managerial accounting plays a pivotal role in managing operational risks by providing managers with relevant financial data and performance metrics to make informed decisions. Operational risks, which include risks related to the daily operations of a business, such as supply chain disruptions, production inefficiencies, and regulatory compliance, can significantly affect a company’s ability to achieve its goals. UAC Nigeria Plc, a conglomerate with diverse business interests in the food, beverages, and real estate sectors, faces operational risks that can impact its profitability and long-term sustainability. Managerial accountants at UAC Nigeria use tools such as cost analysis, budgeting, risk assessment, and performance measurement to help identify and mitigate these risks. By providing financial insights, managerial accounting helps UAC Nigeria monitor operational performance, forecast potential risks, and optimize resource allocation to minimize losses (Okafor & Chukwu, 2023). Despite the importance of managerial accounting in risk management, challenges remain in effectively applying these techniques across the company’s varied business units. This study seeks to explore the role of managerial accounting in managing operational risks at UAC Nigeria and assess its effectiveness in risk mitigation.
Statement of the Problem
UAC Nigeria operates in multiple sectors, each with its own set of operational risks. The company's ability to manage these risks depends on the accuracy and reliability of the financial data provided by its managerial accounting systems. However, there is concern that UAC Nigeria’s current managerial accounting practices may not fully address the complex nature of operational risks, particularly in light of rapid market changes, technological disruptions, and regulatory challenges. This study seeks to examine the role of managerial accounting in managing operational risks at UAC Nigeria and identify areas where improvements in risk management practices can be made.
Objectives of the Study
- To evaluate the role of managerial accounting in managing operational risks at UAC Nigeria.
- To assess the effectiveness of managerial accounting practices in mitigating operational risks at UAC Nigeria.
- To recommend strategies for improving the application of managerial accounting in operational risk management at UAC Nigeria.
Research Questions
- How does managerial accounting contribute to managing operational risks at UAC Nigeria?
- How effective are the managerial accounting practices in mitigating operational risks at UAC Nigeria?
- What strategies can UAC Nigeria adopt to improve its managerial accounting practices for better operational risk management?
Research Hypotheses
- Managerial accounting practices significantly reduce operational risks at UAC Nigeria.
- The use of cost analysis and risk assessment tools in managerial accounting helps mitigate operational risks at UAC Nigeria.
- Improving managerial accounting practices will enhance UAC Nigeria's ability to manage operational risks effectively.
Scope and Limitations of the Study
This study focuses on UAC Nigeria Plc and its use of managerial accounting in managing operational risks. The study will analyze the company’s managerial accounting reports and risk management strategies over the past five years (2020-2025). Limitations include the availability of detailed internal risk management data and potential biases in company-provided information.
Definitions of Terms
- Managerial Accounting: The process of using financial data to assist managers in decision-making, budgeting, and controlling costs.
- Operational Risks: Risks associated with the day-to-day operations of a business, including supply chain disruptions, production issues, and compliance challenges.
- Risk Mitigation: The process of identifying, assessing, and taking steps to reduce the likelihood or impact of operational risks.
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