Risk Management Committee Attributes and Financial Performance of Listed Deposit Money Banks in Nigeria

Agbor V. Ofum, Uwem E. Uwah & Dorathy C. Akpan

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Abstract

As part of corporate governance, the risk management committee is in charge of reducing risks. Poor risk management has caused many Nigerian banks to fail. This study examined how risk management committee experience, independence, diligence, size, and gender diversity affect deposit money banks’ return on assets in Nigeria. A quantitative research design was used to analyse panel data from 13 Nigerian Exchange Group deposit money banks from 2014 to 2023. Secondary data came from sampled banks’ annual reports and the NGX Fact Book. The risk management committee’s characteristics and return on assets were examined using a random-effects regression model. Five hypotheses were tested with coefficients, z-statistics, and p-values at standard significance levels. The empirical data showed that risk management committee features affect bank performance differently. Committee independence predicted ROA most strongly (Coef. = 1.098, p = 0.008). Financial performance improved with gender diversity (Coef. = 0.212, p = 0.015). Committee size decreased ROA (Coef. = -0.298, p = 0.008), suggesting larger committees may hinder productivity. Despite prior beliefs about these governance procedures, committee knowledge and diligence did not affect bank performance (Coef. = -0.011, p = 0.173 and -0.023, p = 0.819). Banks should go beyond regulatory compliance to ensure risk management committee members’ impartiality and objectivity. The benefits of gender diversity should also encourage banks to actively recruit and retain qualified women for risk management committees.

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