Corporate risk scorecard: a comparative study of US and German firms risk score

Abstract

Businesses are never free from risks, yet analysing and better management of risks can always be one of the preferable practices for any successful organisation. Risk assessment, through internal auditing, is one of the best practices in organisations. At the broadest level, a risk-based approach enables firm to prioritise activities in strategic decision making. A risk assessment of the universe's individual elements permits the firms to take rational decision for strategy formulation and thus generate a pre-measure to mitigate risk. The presence of organisations in different continents will certainly demand for country risk assessment. However, an objective assessment of different types of risks will certainly help organisations to take decisions related to diversification. This study addresses tries to provide a framework to understand different risks in a systematic way. We have analysed the risk disclosure of multinationals operating in the USA and Germany from their annual reports and finally compare the total risk identified by the nation and its economic performance. We examine the collected data within a corporate-specific characteristics framework - 'corporate risk score card'.