Re-thinking: Risk Governance?

Risk governance has evolved tremendously in the banking industry. The practice recommends the imperative role of Chief Risk Officer (CRO) to oversee risk. This study explores risk governance's influence over Islamic banks’ performance. A multivariate analysis technique is used simultaneously via Structural Equation Modeling (SEM). This study employed cross-sectional sample of 200 Islamic banks across 21 countries for the year 2014. To examine risk governance and Islamic banks performance, this study captures seventeen variables developed from risk management and corporate governance (ROA, ROE, Profit Margin, CRO, Shariah committee member, CEO, board size, remuneration meeting, credit rating, external audit, accounting standard, loan loss provision, capital adequacy ratio, total deposit ratio, GDP, central bank lending rate and inflation). The simulation result revealsrisk governance acts as mediating variable for Islamic banks’ performance.