Enterprise Risk Management and Bank Performance: A Study of the Indonesian Banking Industry

Abstract

This investigation wants to prove the impact of enterprise risk management on bank performance. The population comes from employees with a working tenure above three years and working in specific departments in the bank in Indonesia. For the unknown population, we utilize snowball sampling based on the excellent relationship with the limited size of the recognized employees. Fortuitously, we can obtain 198 employees as the samples; hence, this study employs the structural equation model with the covariance basis. Moreover, to estimate the path coefficient and its properties and verify the virtuousness of the fit model, the analysis moment structures (AMOS) program is used. Finally, this study concludes that enterprise risk management affects bank performance positively. Finally, this study implies that through the correct risk management, managers can take the opportunity suitable for their strategy and identify the potential risk to be evaluated by the standard process to make the decision correctly.