article · SHILAP Revista de lepidopterología
An examination of forty companies within the Nigerian financial sector across 2012 to 2016 assesses the relationship between enterprise risk management and financial performance. Using two hundred firm observations, performance is measured through return on assets, while Value at Risk serves as an indicator of enterprise risk management practices. The analysis incorporates control variables including financial leverage, board size, firm size, institutional ownership, and risk management committee size. The findings reveal that enterprise risk management relates positively and significantly to financial returns. Similarly, larger board size, firm size, institutional ownership, and risk committee size correlate positively with performance, whereas leverage displays a significant negative relationship. The evidence suggests that integrating structured risk management practices directly benefits the operational returns of listed financial firms, supporting recommendations for regulatory bodies to enforce mandatory framework compliance across the industry.
Understanding how risk controls influence corporate profitability is vital for emerging market stability. The findings demonstrate that disciplined risk governance, through structures like dedicated risk committees and institutional oversight, enhances profitability rather than merely constraining operations. This evidence provides financial leaders and regulatory bodies with clear empirical support to prioritise rigorous risk oversight and prudent debt management in volatile economic environments.
Financial institutions, risk consultants, and corporate governance specialists can use these insights to benchmark risk governance programmes, particularly regarding committee structures and Value at Risk monitoring. Regulators such as central banks can directly apply the findings to design mandatory compliance policies. As an applied empirical analysis based on historical industry data, the findings are near-market and immediately actionable within existing corporate governance and risk operations.
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This study examines the impact of Enterprise Risk Management (ERM) on financial performance in the emerging market with special focus on the Nigerian financial sector. The study investigates 40 companies from the period 2012 to 2016 resulting into 200 firm observations. The method used to measure financial performance was Return on Assets (ROA) while Value at Risk (VaR) was used as a proxy for Enterprise Risk Management (ERM). The study used other control variables such as Leverage (LEV), Board Size (BSIZE), Firm Size (FSIZE), Institutional Ownership (INTOWN) and Risk Management Committee Size (RMC). The result of regression coefficient shows that VaR (0.216), BSIZE (0.218), FSIZE (0.021), INTOWN (0.001), and RMC (0.032) are statistically significant with the exception of LEV (-0.572) which shows an inverse relationship with financial performance. The empirical findings show that ERM is positively and significantly related to financial performance. The results support the hypothesis that ERM has a significant impact on the financial performance of listed firms in the Nigerian financial sector. We recommend that the regulatory authorities (Central Bank of Nigeria, Financial Reporting Council of Nigeria etc.) in charge of the financial sector should ensure that all firms in the sector adopt ERM as a matter of urgency and continue to ensure strict compliance with the ERM framework.
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DOI: 10.5281/zenodo.17521302
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