The Role of Board of Directors in the Establishment of Risk Management Committee

Abstract

The objective of the study is to discuss the roles of board of directors in the establishment of risk management committee for Malaysian's public listed companies. In Malaysia, based on the Malaysian Code on Corporate Governance (MCCG), (2007; 2012) clearly stated the role and responsibility of the board of directors toward the risk management activities. At the Corporate Governance Week 2010 and 2011 as well, the chairman of the Security Commission Malaysia highlighted the responsibility of the board of directors in risk management processes and she expressed concern over the failure of the board of directors to establish appropriate measures for the risk management process in the company. The statement of the chairman of Security Commission Malaysia is in line with MCCG's best practices (2000; 2007; 2012), i.e., the board of directors should identify principle risks and ensure the implementation of an appropriate system to manage these risks.

Fraud Risk Management Model: A Content Analysis Approach

“…The role of risk management function is to identify business threat and opportunities. This function is expected to help the companies make sound business decisions by incorporating the level of risk that they are willing to accept and execute necessary action to achieve business objectives (Ishak & Mohamad Nor, 2017). In realizing the intended outcome of MCCG 2017, it is important to have effective risk management framework to help the companies to take preventive action on the business threats such as fraud.…”

Risk Management practices and potential fraudulent financial reporting: evidence from Malaysia

“…Nevertheless, while regulators are concerned with the implementation of risk management practices, studies showed that risk management practices are still lacking (Ishak and Mohamad Nor, 2017). Many studies were done to relate risk management practices with cash flow volatility (Lobo et al.…”

“…Nevertheless, while regulators are concerned with the implementation of risk management practices, studies showed that risk management practices are still lacking (Ishak and Mohamad Nor, 2017). Many studies were done to relate risk management practices with cash flow volatility (Lobo et al, 2019), value creation (Dilling and Harris, 2018), financial crisis (Gonidakis et al, 2020), auditing (Johnstone and Bedard, 2003;White et al, 2020) and taxation (Doyle et al, 2009).…”

“…This setting may influence fraud risks differently. According to Ishak and Mohamad Nor (2017), while regulators are concerned on firms' risk management disclosure and practices, studies show that corporate governance disclosure, especially on risk reporting among firms, is still lacking (Ishak and Mohamad Nor, 2017). A study done by Bursa Malaysia indicated that although the quality of disclosure has increased, many firms keep publishing general disclosures in the Statement of Risk Management and Internal Control (The Star, 2016).…”