The association between CEO characteristics, internal audit quality and risk-management implementation in the public sector

This study examines the relationships between characteristics of the chief executive officer (CEO) and risk-management implementation in public-sector organisations in Malaysia. Two personality traits of CEOs (1) locus of control, and (2) risk-taking propensity are examined in this study. In addition, this study investigates the role of internal audit quality as a moderator to the relationship between CEO and risk-management implementation. Data were obtained from questionnaires administered to CEOs of federal and state statutory bodies in Malaysia. 55 samples were analysed using hierarchical multiple regression analyses. This study finds only the CEO’s risk-taking propensity to be positively related to risk-management implementation. However, the internal audit quality is found to moderate the relationship between CEO’s locus of control and risk-management implementation. The results suggest that appointing a CEO with the right traits, i.e. risk-taking propensity, and the strengthening the quality of internal audit can help governmental agencies to accelerate risk-management activities within their organisation.