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This study examines the effects of the various risk components like credit risk, interest rate risk and operational risk on the financial performance of Deposit Money Banks in Nigeria. The study is spurred by the persistent cases of bank failure and lack of exhaustive research in this area in Nigeria. The study uses the whole number of banks that have existed in Nigeria from the year 1997 to 2011. The data were collected from the Nigeria Deposit Insurance commission and were analyse using descriptive statistic and ordinary least square regression. It was established that a strong relationship exist between risk components and the financial performance of the banks in Nigeria as indicates by the r-squared value of 91%. However, variables that represent credit risk and the rate of capital to total weighted risk asset have positive relationship while operational and interest rate risk affects the profitability of the banks negatively. Based on the findings it is recommended in this study that both the Deposit Money Banks diversify the management of the other components of risk like minimising frauds instead of over concentrating on credit risk, which by so doing exposes other risk. This can achieve when the Central Bank and the Deposit Money Banks intensify the implementation of existing measure to combat bank frauds.
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