Standalone risk management committee, risk governance diversity and Islamic bank risk-taking

Following the global financial crisis of 2008, new policies, rules and regulations were issued to improve corporate governance (CG) practices, particularly risk management practices, with a view to reducing excessive risk-taking. Hence, this study examined the effects of a standalone risk management committee and risk governance diversity on the risk-taking of Islamic banks. We utilized a set of 389 firm-year observations hand collected from the annual reports of 43 full-fledged Islamic banks drawn from fifteen (15) countries between 2010 and 2020. The findings indicate that the presence of a standalone risk management committee and the proportion of doctor of philosophy (PhD) holders on the risk management committee have a significant negative association with the risk-taking of Islamic banks. In contrast, the proportion of female directors in the risk management committee has a significant positive association with the risk-taking of Islamic banks. We find an insignificant positive association between the proportion of foreign directors in the risk management committee and the risk-taking of Islamic banks.