Risk Management Committee and Corporate Risk Management of Deposit Money Bank in Nigeria

Abstract

This study investigates the influence of Risk Management Committee (RMC) characteristics on corporate risk management in Nigerian Deposit Money Banks (DMBs) from 2014 to 2023. Prompted by the growing need for stronger risk oversight following global financial sector failures, the research examines how RMC size, independence, and gender composition shape the effectiveness of corporate risk management practices. Anchored on Agency Theory, Resource Dependency Theory, and Legitimacy Theory, the study adopts an ex-post facto research design, utilizing secondary data obtained from financial statements, regulatory reports, and industry publications. A sample of 14 listed DMBs was selected based on data availability. Using an econometric model adapted from prior studies, Tobin’s Q and Return on Equity (ROE) were employed as proxies for corporate risk management efficiency and performance. Descriptive results show that most banks exhibit Tobin’s Q values below 1, indicating undervaluation and weak investor confidence. Correlation and regression findings reveal that RMC size has a consistently negative and significant effect on both market valuation and profitability, suggesting that oversized committees may hinder effective oversight. RMC independence demonstrates no significant relationship with performance, implying that independence in its current form may be more symbolic than functional. Gender composition shows a positive but statistically insignificant association with corporate risk management, indicating that diversity alone does not guarantee improved performance. Overall, the study concludes that the structure and composition of RMCs significantly influence corporate risk management outcomes in Nigerian DMBs. It emphasizes that streamlined, expertise-driven committees are more effective in enhancing oversight and strengthening organizational resilience.