The Role of the Board of Directors in the Implementation of Enterprise Risk Management in Malaysian Private Higher Educational Institutions

Abstract

Unconsciously, all human activities have the potential to be exposed to uncertainties. These uncertainties are risks that could interrupt business growth and, consequently, influence better performance achievement. These risks can be overcome with the implementation of Enterprise Risk Management (ERM) within organisations. In Malaysia, few private higher educational institutions (PHEIs) were in trouble due to many causes such as management, finance and marketing. Concerning these issues, this study aims to develop a conceptual framework of ERM drivers and their impact on the performance of Malaysian PHEIs. The questionnaires were distributed to 510 respondents and 217 were returned. Results indicated that both internal factors and size and types of institutions were related to performance in the particular institutions, and the external factor showed a negative relationship with performance. It was also found that all drivers were moderated by the Board of Directors (BODs) and performances. It was suggested for future research to use multiple methods to avoid any possibility of common method bias and to enhance the findings to be generalised, which can prevent overestimating the structural model. At present, research in ERM is well established, but it is still in its infancy for educational institutions.