Role of law enforcement, governance, and digital transformation in risk control and management at Vietnamese commercial banks

Risk control and management are essential tasks necessary to ensure the safe and sustainable development of commercial banks, especially in today’s digital business environment. This study aims to identify the factors and their impact on risk control and management through intermediary variables, including law enforcement, corporate governance, and digital transformation, using the partial least square – structural equation modeling. Data for the study were collected through interviews assessing the perceptions of 765 managers in 35 Vietnamese commercial banks. The results indicate that factors directly affecting law enforcement include digital transformation, awareness of risks related to new technologies, training in law and technological knowledge, employee capabilities, monitoring and inspection procedures, size and complexity of bank operations, and corporate governance. However, only law enforcement and corporate governance have an indirect intermediary impact on risk control and management (digital transformation did not show a statistically significant impact). These findings highlight that, according to managerial perceptions in commercial banks, current digital transformations have not significantly influenced risk control and management, emphasizing the need for further enhancement in this area moving forward. This study makes a positive contribution to the development of models and measurement systems, laying the foundation for similar experimental research in the field of commercial banking in various countries in the future. AcknowledgmentThis study is the result of collaboration between a group of scientists from the Faculty of Law – Hue University and Duy Tan University. The authors would like to acknowledge the support and facilitation provided by both institutions for the publication of this research. Furthermore, this work is conducted within the framework of project code B2023-ĐHH-03 under decision No. 2036/QĐ-BGDĐT dated July 22, 2022.