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The Effect of Strategic Risk Management on Business Stability: A Study of Microfinance Banks in Nasarawa State

  • Project Research
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  • NGN 5000

Background of the Study

Strategic risk management involves identifying, assessing, and mitigating risks to ensure organizational stability and continuity. For microfinance banks, managing risks such as loan defaults, regulatory changes, and economic volatility is critical to maintaining operational stability and customer trust (Okoro & Hassan, 2024).

In Nasarawa State, microfinance banks play a vital role in providing financial services to underserved populations. However, these institutions face challenges such as high credit risks and limited capital reserves. Strategic risk management offers a framework for mitigating these risks and ensuring stability (Adamu & Musa, 2023).

This study examines the effect of strategic risk management on business stability, focusing on practices adopted by microfinance banks in Nasarawa State.

Statement of the Problem

Microfinance banks in Nasarawa State are increasingly vulnerable to risks that threaten their stability and operations. High loan default rates, inadequate risk assessment, and external economic pressures contribute to these challenges. Despite the importance of strategic risk management, its adoption and impact on business stability remain underexplored in this context (Bello & Yakubu, 2025).

This study seeks to address this gap by analyzing risk management practices and their influence on the stability of microfinance banks.

Objectives of the Study

  1. To assess strategic risk management practices in microfinance banks in Nasarawa State.

  2. To evaluate the impact of strategic risk management on business stability.

  3. To recommend strategies for improving risk management practices.

Research Questions

  1. What strategic risk management practices are adopted by microfinance banks in Nasarawa State?

  2. How does strategic risk management influence business stability?

  3. What measures can improve risk management in microfinance banks?

Research Hypotheses

  1. Strategic risk management significantly enhances business stability.

  2. Poor risk management practices negatively affect the stability of microfinance banks.

  3. Improved risk management practices lead to greater operational stability.

Scope and Limitations of the Study

This study focuses on microfinance banks in Nasarawa State, analyzing their strategic risk management practices and their impact on stability. Limitations include differences in the size and scope of operations among banks and external factors such as regulatory policies.

Definitions of Terms

  • Strategic Risk Management: A proactive approach to identifying and managing risks to achieve organizational objectives.

  • Business Stability: The ability of an organization to maintain consistent operations and financial performance.

  • Microfinance Banks: Financial institutions that provide small loans and other services to low-income individuals and small businesses.





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