Assessing the role of chief risk officer expertise on the nexus between enterprise risk management and performance of banks in emerging economy

This paper analyzes the influence of enterprise risk management (ERM) on Nigeria's banks performance, and how this relationship is moderated by the chief risk officer expertise (CRO-HCI). The study develops ERM index based on the extant literature to generate ERM data for 12 banks in Nigeria over the period 2015–2024. The panel dataset with 120 observations was analyzed using fixed-effect estimator and ordered logistic regression. The results without moderating effect of CRO-HCI show that ERM implementation is significantly associated with return on equity (ROE) in model one without control variables, model three with control variables and time fixed effect, and model four with control variables, time fixed effect and bank fixed effect but not in model two with only control variables. We find similar significant results when return on asset (ROA) is used as a measure of Nigerian banks performance except for model one. For the moderation of ERM with CRO-HCI, we do not find the effect to be significant on both banks' performances (ROE and ROA) in all the models. Finally, we examine whether the broad-based CRO-HCI and individual expertise areas of CRO improve the quality of banks' ERM processes (ERM-ratings). Results from the ordered logistic regression show that top ten executives, high-level risk management role, and a risk-related qualification have significant positive influence on ERM ratings. That is, the level of expertise of CRO improves the quality of ERM of banks. Our findings are important as they contribute to the debate on whether ERM has a direct impact on profitability, thereby providing new insights into academics and policymakers. • ERM implementation is significantly associated with return on equity (ROE). • ERM–CRO-HCI moderation shows no significant effect on ROE and ROA in all models. • CRO-HCI broad and expert areas improve banks' ERM process quality (ERM ratings). • Top executives, risk roles, and qualifications positively influence ERM ratings. • Findings add to debate on ERM's impact on profitability for academics and policymakers.