Drivers to the Implementation of Risk Management Practices: A Conceptual Framework

Abstract

The implementation of risk management (RM) practices in past research has shown to be diverse. Although many studies have attempted to explore the drivers to the wide variation of RM implementation, there is sparse conceptual framework which describes the linking between the RM implementation drivers with the implementation of RM practices. Therefore, this study focuses on understanding the influence of RM drivers particularly the corporate governance, compliance to rules and regulations, pressure from external auditors, firm and industry characteristics, internal factors, acknowledgment of RM potential benefits, emergence of new business trends, occurrence of risk events, and vulnerabilities of small and medium enterprises (SMEs). To understand the influences of the aforementioned drivers towards the implementation of RM practices, this study proposes a conceptual framework which extends the institutional theory and contingency theory by introducing the diffusion of innovation (DOI) theory into the present literature. Finally, this paper outlines the methodology of how an empirical research might be systematically conducted by using the proposed conceptual framework.