Determinants Influencing the Implementation of Enterprise Risk Management in the Nigerian Banking Sector

Abstract

Enterprise risk management (ERM) is an organized, dependable and reproducible process across the entire system for identifying, measuring, controlling and reporting of opportunities and threats that could impact on the objectives of the organization. The purpose of this study is to empirically examine the extent of ERM implementation in the Nigerian banking sector and the identification of antecedents influencing the adoption. 722 questionnaires were administered to top, middle and lower level managers across 361branches and the headquarters of the respective 21banks. The respondents consist of the staff of the risk management, internal audit and operational departments at both the headquarters and branches of the banks. Both SPSS Software and logistic regression model were used for data analysis. The finding reveals that there is plausible evidence that there is an ERM complete in place in most of the banks while insignificant number indicated ERM partial in place. Furthermore, the finding also indicates that internal audit effectiveness, human resource competency, Regulatory influence and top management commitment were statistically positively significant to the stage of ERM implementation while board characteristic was negatively significant. However, most of the banks had already gone through the ERM process before the CBN mandate. This study provides a new knowledge of the literature on the antecedents of ERM adoption. Similarly, the finding has a policy implication for the board of directors to improve their oversight functions and the regulatory authorities entrench risk based supervision on all policy issues. Future research is therefore, advocated on the effectiveness and impact of ERM systems after implementation using different variables and using board members and top management as respondents.

Does enterprise risk management impact accounting quality? Evidence from the Nigerian financial institutions

“…Not only is ERM believed to have enhanced firm's ability to prevent the impact of economic crisis, it is believed that it will bring about an improved value relevance of accounting information for firms practising ERM (COSO, 2004). The support for ERM in most countries of the world today is a salient success in mitigation of further economic crisis and improvement in the quality of accounting information (Dabari & Saidin, 2015). In Nigeria, the research on ERM has gained prominence due to corporate scandals (Cadbury Nigeria in 2006; Banking crisis in 2009) experienced in recent times.…”

Enterprise Risk Management and Performance of Selected Listed Consumer Goods Companies in Nigeria

“…In addition, (COSO, 2004) emphasized that the implementation of ERM by companies largely depend on corporate governance, enabling laws, regulations, and listing standards. Therefore, the implementation of ERM framework is usually effected by existence of audit committee, risk management committee, chief legal officer, chief risk officer, regulations like, laws and other regulatory compliance and the size of the firm (Ishaya & Siti, 2015).…”

“…In addition, Committee of Sponsoring Organizations of the Treadway Commission (COSO, 2004) emphasized that implementation of ERM by companies largely depend on corporate governance, enabling laws, regulations, and listing requirements. According to Ishaya and Siti (2015), the implementation of ERM is usually influenced by existence of corporate internal audit effectiveness, existence of risk management committee, existence of chief legal officer, chief risk officer, firm size and regulatory support like, laws and other regulatory compliance.…”

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“…For instance, Nahar et al (2016) report that there is significant relationship between risk disclosure, existence of risk management committee, and number of risk committees and performance of banks in Australia. Likewise, with the use of primary data collected from 722 managers of 21 banks and their branches in Nigeria, Dabari and Saidin (2015) found that enterprise risk management (ERM) is implemented by some banks in Nigeria, but yet to be implement by others. As a result, this study suggests the following hypothesis:…”