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Enterprise risk management and firm performance: Role of the risk committee

Malik, Muhammad Farhan; Zaman, Mahbub; Buckby, Sherrena

Authors

Muhammad Farhan Malik

Sherrena Buckby



Abstract

In recent years, there have been increasing efforts in the corporate world to invest in risk management and governance processes. In this paper, we examine the impact of Enterprise Risk Management (ERM) on firm performance by examining whether firm performance is strengthened or weakened by the establishment of a board-level risk committee (BLRC), an important governance mechanism that oversees ERM processes. Based on 260 observations from FTSE350 listed firms in the UK during 2012–2015, we find the effectiveness of ERM significantly and positively affects firm performance. We also find strong BLRC governance complements this relationship and increases the firm performance effects of ERM. Our findings suggest the mere formation of a BLRC is not a panacea for ERM oversight; however, existence of a structurally strong BLRC is crucial for effective ERM governance.

Citation

Malik, M. F., Zaman, M., & Buckby, S. (2020). Enterprise risk management and firm performance: Role of the risk committee. Journal of Contemporary Accounting and Economics, 16(1), https://doi.org/10.1016/j.jcae.2019.100178

Journal Article Type Article
Acceptance Date Nov 25, 2019
Online Publication Date Dec 4, 2019
Publication Date 2020-04
Deposit Date Jan 30, 2020
Publicly Available Date Jun 5, 2021
Journal Journal of Contemporary Accounting and Economics
Print ISSN 1815-5669
Publisher Elsevier
Peer Reviewed Peer Reviewed
Volume 16
Issue 1
Article Number 100178
DOI https://doi.org/10.1016/j.jcae.2019.100178
Keywords Enterprise risk management; Risk committee; Risk governance; Firm performance
Public URL https://hull-repository.worktribe.com/output/3403225
Additional Information This article is maintained by: Elsevier; Article Title: Enterprise risk management and firm performance: Role of the risk committee; Journal Title: Journal of Contemporary Accounting & Economics; CrossRef DOI link to publisher maintained version: https://doi.org/10.1016/j.jcae.2019.100178; Content Type: article; Copyright: © 2019 Elsevier Ltd. All rights reserved.

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