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

Muhammad Farhan Malik, Mahbub Zaman, Sherrena Buckby

Research output: Contribution to journalArticle

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.

Original languageEnglish
Article number100178
JournalJournal of Contemporary Accounting and Economics
Volume16
Issue number1
DOIs
Publication statusPublished - 1 Apr 2020

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Firm performance
Management performance
Enterprise risk management
Governance
Governance mechanisms
Risk governance
Oversight
Risk management
Management process

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Malik, Muhammad Farhan ; Zaman, Mahbub ; Buckby, Sherrena. / Enterprise risk management and firm performance : Role of the risk committee. In: Journal of Contemporary Accounting and Economics. 2020 ; Vol. 16, No. 1.
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Enterprise risk management and firm performance : Role of the risk committee. / Malik, Muhammad Farhan; Zaman, Mahbub; Buckby, Sherrena.

In: Journal of Contemporary Accounting and Economics, Vol. 16, No. 1, 100178, 01.04.2020.

Research output: Contribution to journalArticle

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