ENTERPRISE RISK MANAGEMENT AND STAKEHOLDERS’ VALUE: EVIDENCE FROM NIGERIAN INSURANCE COMPANIES

Abstract

The increasing shareholders’ exposure to various kinds of risks requires more monitoring from
the companies in order to maximize and preserve their values. Stakeholders’ value is believed to
positively increase if Enterprise Risk Management (ERM) is implemented. This study empirically
examined the extent in which ERM adoption and implementation affect stakeholders’ value among
selected insurance companies in Lagos Metropolis, Nigeria. The specific objectives of the study
are: to determine the impact of ERM drivers and framework on implementation strategy in selected
insurance companies; and to determine the effect of ERM awareness and implementation on
stakeholders’ value. Top 15 insurance companies in operation between 2018 and 2019 were
investigated through purposive sampling technique. Data collected were analysed using Monte
Carlo test and multiple regressions. The findings show that both ERM drivers and framework have
positive and significant effect on implementation. However, despite both ERM awareness and
implementation contributed up to 70.1% to stakeholders’ value, the effect is not significant for
ERM awareness whereas that of implementation move at the speed of 84.3%. Hence, the study
concluded that ERM drivers and framework have positive and significant effect on implementation.
Also, ERM implementation has strong and significant effect on stakeholders’ value while that of
awareness is not significant. In line the positive effect of ERM implementation on stakeholders’
value, we recommend that the existing drivers and framework for implementation should be
sustained among the selected insurance companies in order to improve the stakeholders’ value
among the selected insurance companies.