Why Do Bank Boards Have Risk Committees?

Why Do Bank Boards Have Risk Committees?

René Stulz, James Tompkins, Rohan Williamson, Zhongxia (Shelly) Ye

Series number :

Serial Number: 

Date posted :

August 17 2021

Last revised :

January 07 2022
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  • Corporate governance • 
  • Risk Committee • 
  • Bank boards • 
  • Qualitative Research • 
  • Dodd-Frank

We develop a theory of bank board risk committees that explains why such committees can be valuable to shareholders even when they do not reduce bank risk.

As predicted by our theory (1) many large and complex banks voluntarily chose to have a risk committee before the Dodd-Frank Act forced bank holding companies with assets in excess of $10 billion to have a board risk committee, and (2) establishing a board risk committee does not reduce a bank’s risk on average. Using unique interview data, we show that the work of risk committees is consistent with our theory.


Real name:
Zhongxia (Shelly) Ye
Real name:
James Tompkins
Real name:
Rohan Williamson