Internal Control Information and Communication Effect on Operational Risk of Quoted Banks in Nigeria 1. Introduction An internal control system is designed as being the whole system of controls financial and otherwise established by the management in order to carry on the business of the enterprise in an orderly and efficient manner, ensure adherence to management policies, safeguard the assets and secure as far as possible the completeness and accuracy of the records (COSO, 1992). Corporate organisations are obligated to disclose fully issues that concerns their operations in order to help investors make investment decisions as well as inform the judgment of financial statement users (Hossian, 2008). Operational risk disclosure is expected to close the gap in communication between banking management and its stakeholders especially lenders and investors (Verrechia 1999; Archambault & Archambault, 2003). Wallace, 1988, Adeyemi, 2006 and Ofoegbu & Okoye, 2006 have investigated the extent of disclosure of Nigerian firms in the banking sector, they all found the same result of weak corporate reporting practices. The internal control system of an organization is shouldered with the responsibility of improving effectiveness and efficiency of activities. They ensure that laid down rules, laws, policies and guidelines are adhered. Financial reporting quality and reliability of the internal control system of an organization is important if organizational goals must be achieved. Internal control system assists banks in the prevention and detection of fraud and errors as well as the causes of such financial losses that may arise. One of the main reasons for banking failures which results in major financial loss and even bankruptcy is high risks taken by bank management on an excessive scale and inability of controlling them. The lack of an internal control system whose duty is to keep the risks or major breakdowns within an existing internal control system under control poses a threat against the success of the banking sector. These operational risk has risen drastically in recent times. Corporate governance in many banks failed because their boards ignored best practices for various reasons, ranging from being misled by executive management and participating in obtaining unsecured loans at the expense of depositors, to lack of capacity to enforce good governance on bank management. Uneven flow of information in the system. There were also the problems of the overbearing influence on the boards by the Chairmen/CEOs, lack of independence of some boards, unclear lines of authority to failure to make meaningful contributions to safeguard the growth and development of the banks, weak ethical standards, failure to adhere to well established policies and procedures, poor communication among employees, and ineffective board committees information flow. These Internal control weaknesses are revealed in operational losses in