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

Abstract

Enterprise Risk Management (ERM) is an integrated framework and monitoring tool for managing uncertainties surrounding the business objectives. This study evaluated the relationship between enterprise risk management and performance of Twenty (20) consumer goods companies listed on the Nigerian Stock Exchange. The independent variables used are existence of risk management committee, existence of financial expertise, existence of audit committee, existence of Chief risk officer and board size. The study adopted ex post facto research design and data were sourced from annual reports and accounts of the selected Consumer Goods Companies. The collated data were analysed using descriptive statistics and generalised least square. The results reveal that risk management committee, financial expertise and board size have significant positive effect on performance. The results also revealed that existence of audit committee has a significant negative effect on performance while existence of chief risk officer has no significant effect on performance. The study therefore recommended that the regulatory authorities and other relevant institutions are enjoined to reassess their supervisory role with the view to strengthen the ERM process and taking the issue of risk management seriously at every level of organisations to provide reasonable assurance.

Assessing the Factor that Determines Enterprise Risk Management: Special Emphasis on Tomato Production Value Chains in East Showa zone, Ethiopia

“…In other words, when a firm establishes a network risk management committees across each department, it would get a room to monitor potential threats. This in turn, leads to enhancing the capacity of the firm (Yinka, et al, 2018). Elsaed et al, (2011) illustrated that the rationale behind dealing with enterprise risk management is due to the reason that it makes organizations to have enhanced corporate governances, a sound managerial system, a means to raise employees' level of awareness, better cost management techniques, and higher efficiencies as the system of performance management is absolutely effective.…”

Effect of board characteristics and risk management practices on the financial performance of listed non-financial firms in Nigeria

“…ERM is an all-inclusive risk management model requiring the recognition, evaluation, and management of risk holistically and systematically (Erin & Aribaba, 2021). ERM is a framework outlined as a monitoring tool for managing business activities risk (Salaudeen et al, 2018). It is a package that evaluates and manages risks encountered to conform to the standard for compliance required by the creditors, rating organizations, regulating bodies and stock exchanges, and to achieve its objectives (Meidell & Kaarbøe, 2017).…”

“…The principal is presumed to be risk-neutral, but the agents are risk-averse (Eisenhardt, 1989). The outcome of this problem is what Jensen and Meckling (1976) refer to as agency costs suffered by principals/owners in an attempt to make sure that agents/managers act in the principals' interest (Salaudeen et al, 2018). Agency theory has been effective in reducing these problems by a contractual approach.…”

“…These risk events are not restricted only to Nigeria but are witnessed even in developed economies like the US and Europe (Ojeka et al, 2019;Erin & Aribaba, 2021). Thus, the Nigerian government adopted models from the developed countries and has, through the capital market and financial market regulators, introduced various corporate governance codes in which risk management has been listed and noted as among the cardinal duties of the firm's management (Salaudeen et al, 2018). Corporate risk management adoption in Nigeria is seen as an emerging strategic tool designed to help managers act on the present and future risks and manage seeming risks through a holistic method (Erin et al, 2020).…”

“…However, past studies focusing on board characteristics, risk management structure, and performance specifically in Nigeria are scanty (Salaudeen et al, 2018). Where these exist, most of the findings have signaled poor corporate governance and risk management in most listed Nigerian firms with poor performance (Kakanda et al, 2017).…”