Artificial Intelligence (AI) is ushering in a new era in banking, characterized by improved efficiency and a stronger emphasis on customer satisfaction. Persistent challenges continue to confront Nigeria’s banking system, spanning credit risk exposures, operational shortcomings, cybercrime, regulatory lapses and reputational vulnerabilities. The main objective of this study is to assess the challenges and policy implication of artificial intelligence and risk mitigation in Nigeria’s banking sector. The study employed a survey research design, utilizing estimation techniques such as simple percentages and regression analysis to analyze data collected through primary sources. The primary data were collected with the aid of a structured 5-point likert scale questionnaires. Purposive sampling technique was used to select 7 branches of Zenith Bank in Enugu State. The questionnaires were distributed to a sample size of 383 from a population of 9,271 using Taro Yamane (1967) formula. Data were analyzed using both traditional econometric techniques and AI-driven predictive model (Neural Network).The study concludes that AI applications have strong potential in mitigating credit risk and operational risks in Nigerian banks while applications in cyber fraud management are still emerging. The study also concludes that AI tools when aligned with strong internal control systems play a critical role in strengthening enterprise risk management in Nigerian banks. The study recommends that AI tools should be combined with human expertise (risk managers must interpret AI insights) to ensure context specific decision making. Banks should also strengthen data quality and cyber security infrastructure for AI deployment.