By Asmau Ahmed 

For startups operating in Nigeria’s highly volatilile business environment, systematic risk management is not a luxury but a foundational necessity for survival, growth, and investor credibility. The failure to embed risk management frameworks into their operational DNA exposes startups to legal, financial, and reputational hazards that are entirely avoidable.

Nigeria’s startup ecosystem is one of the fastest-growing on the African continent, attracting over $1.3 billion in funding in 2021 alone. Yet, more than 80% of startups in the country fail within the first three years, according to a 2022 report by the Nigerian Economic Summit Group (NESG). Among the most cited causes are regulatory compliance failures, poor governance structures, and cash flow mismanagement—all of which are ultimately risk management failures.

Risk management refers to the structured process of identifying, assessing, and mitigating potential threats that could impair a startup’s ability to achieve its business goals. In Nigeria, these threats are compounded by infrastructural deficits, foreign exchange volatility, regulatory opacity, political instability, and systemic corruption. Yet, many early-stage ventures focus exclusively on product development and market growth, neglecting the systemic risks that could abruptly end their journey.

1. Legal and Regulatory Risk

Many startups fail to conduct proper legal due diligence when structuring their businesses. Under the Companies and Allied Matters Act (CAMA) 2020, every Nigerian startup operating as a company is required to maintain proper records, file annual returns, and adhere to basic governance structures including the appointment of Directors and Company Secretaries. Non-compliance attracts fines and, in some cases, regulatory blacklisting.

A well-qualified Company Secretary plays a pivotal role here—not merely as a compliance officer but as a strategic advisor responsible for maintaining governance frameworks, ensuring regulatory filings, and supporting the board on legal risk matters. For early-stage ventures navigating complex regulatory terrain, the absence of such structure can be perilous.

Moreover, the Nigeria Startup Act (2022) establishes a legal framework that grants eligible startups tax incentives, regulatory support, and access to funding. But to qualify, a startup must be incorporated under CAMA, register with the Startup Support and Engagement Portal, and comply with relevant sectoral regulations. Ignorance or negligence of these requirements is a critical risk.

For instance, in 2023, several FinTech startups faced sanctions from the Central Bank of Nigeria for operating without proper licensing under the Bank and Other Financial Institutions Act (BOFIA). This damaged their market perception and restricted their ability to raise follow-on capital.

2. Financial and Capital Risk

Startups often operate with tight budgets and irregular cash flows. Poor capital allocation, lack of budgeting discipline, and overreliance on external funding can lead to insolvency. Financial risk management involves maintaining financial statements, tracking burn rates, and building realistic revenue projections.

Under CAMA, Directors have fiduciary duties to act in the best interest of the company and avoid reckless trading that could lead to insolvency. Ignoring this principle exposes founders to personal liability in extreme cases.

An experienced Company Secretary, working closely with the board, can help instill internal controls, draft financial policies, and monitor compliance with statutory reporting obligations. These are critical safeguards against financial missteps.

To illustrate, the 2021 closure of several AgriTech platforms that promised high returns to investors highlighted the financial mismanagement rampant in the ecosystem. In many cases, companies operated as Ponzi schemes masked as startups, lacking audited accounts or clear financial governance.

3. Operational and Human Resource Risk

Many startups depend on lean teams with overlapping responsibilities, making them vulnerable to key-person risk and skill gaps. Failure to formalize employment contracts or protect intellectual property (IP) through non-disclosure agreements can result in costly disputes.

The Startup Act encourages eligible startups to maintain structured HR policies and training programs. Yet, implementation remains weak. For example, IP theft among former employees is increasingly common in Nigeria’s creative tech and e-commerce sectors.

Here too, a Company Secretary can guide founders in adopting internal frameworks—employment policies, onboarding documentation, and legal templates—to mitigate HR-related risks.

4. Reputational Risk and Data Security

With the rise of data-driven services, especially in FinTech, HealthTech, and EdTech, compliance with data protection regulations is vital. The Nigeria Data Protection Regulation (NDPR) though not binding, provides a standard for drafting consent policies, data breach protocols, and third-party data processing contracts. A data breach or public controversy can erode customer trust overnight.

In 2020, a popular Nigerian HealthTech startup faced public backlash and client attrition after user data was leaked online, reportedly due to poor cloud storage security. The company lost several institutional partnerships and was compelled to undergo a complete audit.

5. Strategic and Market Risk

Startups must navigate unpredictable market dynamics—currency devaluations, policy changes, or sudden shifts in consumer preferences. Without strategic scenario planning, many fail to pivot effectively. In 2021, a transport-tech startup based in Lagos went under within weeks of the government’s ban on motorcycles in key areas. With no risk mitigation or diversification strategy, the business was left stranded.

Conclusion: Risk Is Reality- Learn to Deal with it

Startups are inherently exposed to risk. What separates those that thrive from those that collapse is not the absence of risk but the discipline to anticipate, document, and address it.

By integrating risk management into pitch decks, cap tables, HR practices, and customer acquisition strategies, Nigerian startups can build resilience, improve investor confidence, and increase their long-term survival odds. A strong governance culture—anchored by a proactive board and supported by a competent Company Secretary—can provide the structure and oversight necessary to navigate uncertainty.

The tools exist, what is required is a mindset shift. For every visionary founder, risk management must be part of the vision.

About the Author:

Asmau Ahmed is a Nigerian legal practitioner with extensive experience in Litigation, Corporate Law, Intellectual Property, and Islamic Law. She works with individuals, startups, and SMEs on business registration, trademark protection, and comprehensive legal advisory services.

She is the founder of FYMA Legal, a digital legal platform offering simplified legal solutions for businesses and creatives. Asmau is also a passionate writer who uses content to educate, empower, and connect with others through the law and everyday life experiences.

She is committed to making  law accessible and practical for all, bridging the gap between technical legal systems and the everyday people they are meant to serve.

She can be reached via email at lawithasmau@gmail.com, on LinkedIn at @asmauahmed, and on Instagram at @_asmauahmed.

The Nigerian Bar Association, Lagos Branch, has officially confirmed Kelechukwu Uzoka, Esq. as its Secretary-Elect following the conclusion of its 2025 Branch Elections.

Uzoka, a tech-forward legal practitioner and partner at K&C Partners, emerged unopposed and was returned elected after the release of the final list by the NBA Lagos Electoral Committee.

In a statement shared with colleagues and supporters, Uzoka expressed deep gratitude for the confidence reposed in him by members of the Branch.

“While I ran unopposed, I do not take the trust and goodwill of our members for granted. This is not just a mandate, it is a responsibility. I am committed to building a Secretariat that is modern, transparent, and truly responsive to the needs of our members.”

His campaign was anchored on the theme “Innovation & Efficiency,” highlighting a forward-looking agenda to digitise Secretariat operations, improve member communication, streamline processes like stamp and seal applications, and build a more accessible support system for both EXCO and Committees.

A strong advocate for technology in legal practice, Uzoka has served the Bar in various capacities, including on the NBA Lagos Law Week Technical Support Team, the Human Rights Committee, and the SBL CPC Tech Subcommittee. He is also a well-known voice in the legaltech ecosystem and a regular contributor to conversations around innovation and legal development in Nigeria.

“The Secretariat should reflect the standard of the Premier Bar. I look forward to working closely with the incoming Chairman and Executive Committee to raise the bar through innovation, structure, and service,” he added.

Uzoka also extended congratulations to all other candidates and commended the Electoral Committee for conducting a transparent and orderly process. He called on all members to unite in purpose, stating, “Now is the time to move forward together as one Bar.”

He and other elected executives are expected to officially assume office at the upcoming NBA Lagos Branch Annual General Meeting on 25th of July, 2025.

The Nigerian Bar Association, Lagos Branch, has officially confirmed Kelechukwu Uzoka, Esq. as its Secretary-Elect following the conclusion of its 2025 Branch Elections.

Uzoka, a tech-forward legal practitioner and partner at K&C Partners, emerged unopposed and was returned elected after the release of the final list by the NBA Lagos Electoral Committee.

In a statement shared with colleagues and supporters, Uzoka expressed deep gratitude for the confidence reposed in him by members of the Branch.

“While I ran unopposed, I do not take the trust and goodwill of our members for granted. This is not just a mandate, it is a responsibility. I am committed to building a Secretariat that is modern, transparent, and truly responsive to the needs of our members.”

His campaign was anchored on the theme “Innovation & Efficiency,” highlighting a forward-looking agenda to digitise Secretariat operations, improve member communication, streamline processes like stamp and seal applications, and build a more accessible support system for both EXCO and Committees.

A strong advocate for technology in legal practice, Uzoka has served the Bar in various capacities, including on the NBA Lagos Law Week Technical Support Team, the Human Rights Committee, and the SBL CPC Tech Subcommittee. He is also a well-known voice in the legaltech ecosystem and a regular contributor to conversations around innovation and legal development in Nigeria.

“The Secretariat should reflect the standard of the Premier Bar. I look forward to working closely with the incoming Chairman and Executive Committee to raise the bar through innovation, structure, and service,” he added.

Uzoka also extended congratulations to all other candidates and commended the Electoral Committee for conducting a transparent and orderly process. He called on all members to unite in purpose, stating, “Now is the time to move forward together as one Bar.”

He and other elected executives are expected to officially assume office at the upcoming NBA Lagos Branch Annual General Meeting on 25th of July, 2025.