RISK MANAGEMENT, CORPORATE GOVERNANCE AND INVESTMENT BANKING: THE ROLE OF CHIEF RISK OFFICER

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Abstract

This paper focuses on the defining the role of CRO in corporate governance and to show the interrelation between the way of CRO subordination and performance of investment bank. The sample consists of observations over a period of 2011 for 29 biggest investment banks (by amount of assets) implementing world-wide investment activity. The banks are originated in the USA (8), Eastern Europe (14), China (2), Japan (2), Canada (2), and Australia (1). With the aim to evaluate and compare financial performance of selected banks the construction of synthetic key performance indicator (SKPI) is worked out. The empirical analysis of risk management in the research is based on two different groups of factors, which could be used to evaluate the effectiveness of risk management in this sphere: analysis of CRO impact - Risk Management Committee factors and CRO factors, and Evaluation of Financial Performance. Results show that the CRO presence in investment banks effect positively on the financial performance.

Keywords: Risk Governance, Investment Banking, Chief Risk Officer, Risk Management Committee

How to cite this paper: Scherbina, T., Afanasieva, O., & Lapina, Y. (2013). Risk management, corporate governance and investment banking: The role of chief risk officer. Corporate Ownership & Control, 10(3-2), 313-330. https://doi.org/10.22495/cocv10i3c2art5