ANALYSIS OF THE EFFECT OF CORPORATE GOVERNANCE ATTRIBUTES ON RISK MANAGEMENT PRACTICES

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Abstract

Despite recent increased risk research attention being focussed on the Canadian and international scene, there are few research studies that specifically address the relation between corporate governance systems and risk management practices. This paper examines the relation between corporate governance systems and enterprise risk management. More specifically, we analyze how corporate governance attributes and particularly board characteristics can affect risk management practices in the context of Canadian listed companies. Using a content analysis approach, the level of exposure to risk in terms of likelihood, the consequences of such risk and the strategies for managing that risk were identified for each type of risk. The results reveal that corporate governance attributes related to board’s structure, directors’ characteristics and the board’s operating process play a significant and important role in establishing an integrative risk management approach. The results show that directors’ characteristics and the board’s process significantly determine the quality of risk management through the level of risk-taking in decisions, especially in terms of financial risks.

Keywords: Board Structure, Directors’ Characteristics, Board Process, Risk Management Practices, Financial Risk

JEL Classification: G32, G34, M41, C22, C58

Received: 13.02.2018

Accepted: 07.03.2018

Published online: 12.03.2018

How to cite this paper: Gouiaa, R. (2018). Analysis of the effect of corporate governance attributes on risk management practices. Risk Governance and Control: Financial Markets & Institutions, 8(1), 14-23. https://doi.org/10.22495/rgcv8i1art2