Corporate governance, firm characteristics and risk management committee formation in Saudi Arabia

Abstract

This study investigates the determinants influencing the establishment of Risk Management Committees (RMCs) and Separate Risk Management Committees (SRMCs) in Saudi firms on the period of 2017 to 2020. Drawing on agency theory and prior governance literature, logistic regression analysis was employed to examine the role of board characteristics, industry affiliation, and organizational complexity. The findings reveal that the presence of non-executive directors, an independent chairman, and larger board size significantly increase the likelihood of RMC and SRMC formation, underscoring the importance of board independence and diversity in strengthening risk oversight structures. In the context of Saudi Arabia’s Vision 2030, these results highlight the critical role of governance structures in promoting proactive risk management. The study contributes to offer practical insights for policymakers, regulators, and corporate leaders.