Advances in Risk Based Financial Governance Shaping Institutional Investment Decision Practices Globally

• Author(s): Elikem Kwasi Agbosu; Lovelyn Ekpedo; Omolara Adeyoyin
• Paper ID: 1714306
• Page: 448-465
• Published Date: 30-11-2019
• Published In: Iconic Research And Engineering Journals
• Publisher: IRE Journals
• e-ISSN: 2456-8880
• Volume/Issue: Volume 3 Issue 5 November-2019

Abstract

Recent developments in risk-based financial governance have significantly reshaped institutional investment decision-making practices globally. Traditional governance frameworks, which often emphasized compliance and reporting, are increasingly being supplemented or replaced by approaches that integrate risk assessment, predictive analytics, and dynamic monitoring into investment strategies. Risk-based governance enables institutional investors, including pension funds, sovereign wealth funds, and asset managers, to systematically identify, evaluate, and mitigate financial, operational, and systemic risks while aligning investment decisions with organizational objectives and regulatory expectations. This evolution has been driven by heightened market volatility, increasing complexity of financial instruments, globalization of capital flows, and the growing recognition that traditional, rules-based oversight is insufficient for managing emerging and interconnected risks. Empirical and conceptual research highlights several key advances in risk-based governance. These include the adoption of enterprise-wide risk frameworks, incorporation of stress testing and scenario analysis, and integration of quantitative risk metrics such as Value-at-Risk, Conditional Value-at-Risk, and tail-risk measures into strategic allocation decisions. Furthermore, advances in predictive analytics, artificial intelligence, and data-driven risk modeling have enhanced the ability of institutional investors to anticipate potential disruptions and optimize portfolio construction under uncertainty. Governance structures are increasingly designed to ensure accountability, transparency, and alignment between risk appetite, regulatory compliance, and investment objectives. Despite these advancements, challenges persist, particularly in harmonizing governance practices across jurisdictions, addressing data quality and model risk, and integrating environmental, social, and governance (ESG) considerations into risk-based decision frameworks. Future research is expected to focus on the operationalization of risk-based governance at both organizational and cross-market levels, development of standardized risk performance metrics, and the application of explainable AI to improve decision transparency. Overall, risk-based financial governance represents a strategic paradigm shift in institutional investment management, enhancing the ability to balance risk and return, improve resilience to systemic shocks, and meet long-term sustainability and fiduciary goals.

Keywords

Risk-Based Financial Governance; Institutional Investment; Portfolio Risk Management; Enterprise Risk Frameworks; Predictive Analytics; ESG Integration; Systemic Risk; Decision-Making Practices

Citations

IRE Journals:
Elikem Kwasi Agbosu, Lovelyn Ekpedo, Omolara Adeyoyin "Advances in Risk Based Financial Governance Shaping Institutional Investment Decision Practices Globally" Iconic Research And Engineering Journals Volume 3 Issue 5 2019 Page 448-465

IEEE:
Elikem Kwasi Agbosu, Lovelyn Ekpedo, Omolara Adeyoyin "Advances in Risk Based Financial Governance Shaping Institutional Investment Decision Practices Globally" Iconic Research And Engineering Journals, 3(5)