J. Risk Financial Manag. 2022, 15, 120. https://doi.org/10.3390/ jrfm1502008x www.mdpi.com/journal/jrfm
Article
Risk Committee’s Influence on Enterprise Risk Management
Onipe Adabenege Yahaya
1
*, Ishaku Yakubu
2
1&2
Department of Accounting, Faculty of Management Sciences, Nigerian Defence Academy, Kaduna, Nigeria
* Correspondence: yoadabenege@nda.edu.ng
Abstract: Risk is real and it is particularly very serious in the case of managing banks in Nigeria
because of several reasons; including the fact that it is an emerging economy. It can affect a bank’s
bottom-line to say the least and even its survival. It is in view of this that this article links risk
committee effectiveness with risk management by banks in Nigeria. Using 130 observations (13
banks, 10 years) for 2012-2021, we employ a correlational research design to develop a panel model
linking risk committee characteristics with risk management. We use descriptive statistics,
correlation matrix and regression to analyse the data after accounting for outliers, normality and
homoscedasticity of residual, multicollinearity, model specification error, and panel effects tests. The
findings show that risk committee presence and size have negative and significant effect on risk
management. It also shows that risk committee independence, gender diversity, and meetings show
positive and significant effect on risk management. On these bases, we conclude that risk committee
presence and size negative determinants while risk committee independence, gender diversity and
meetings are positive determinants of risk management. We suggest that risk committee should be
merged with the audit committee of the board across banks. We also suggest that risk committee size
should be reduced in order to cut costs. Further, we recommend that risk committee independence
should be enhanced by appointing more non-executive directors to the committee. We also
recommend that more women directors should be appointed into the risk committee of banks.
Finally, we recommend that there should be more meetings for members of risk committee.
Regulators and stakeholders stand to benefit from the study as more empirical evidence on the role
of board risk committee is provided. The findings are limited to stakeholders in banks since there
are variations in different sectors. The study is also limited due to the period covered and therefore,
the validity of its findings is restricted to the years covered. Also, the choice of methods used may
be subject of debate since different methods produce different results. Finally, broader set of
variables may be used in future research effort linking risk committee with risk management.
Keywords: bank, gender diversity, independence, meeting, Nigeria, presence, size, risk committee,
risk management,
1. Introduction
A number of empirical studies have examined the association between risk
management committee (RMC) or also known as risk committee (RC) and firm probability
or financial performance (Abubakar et al., 2018; Addae & Gamfi, 2022; Alabdullah et al.,
2021; Ames et al., 2018; Battaglia & Gallo, 2015; Chukwujekwu et al., 2020; Darmawan et al.,
2021; Oboreh et al., 2022; Elamer & Benyazid., 2018; Elbahar, 2016; Erin et al., 2020; Fali et
Citation: Yahaya, O. A., & Yakubu, I.
(2022). Risk committee’s Influence on
enterprise risk management. Journal of Risk
and Financial Management 15(4): 120.
https://doi.org/10.3390/jrfm1502008x
Academic Editors: Muhammad Tanko and
Muhammad Liman Muhammad
Received: 31 December 2021
Accepted: 9 February 2022
Published: 30 August 2022
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