Enterprise Risk Management: Review, Critique, and Research Directions

Abstract

Many regulators, rating agencies, executives, and academics have responded to recent corporate scandals and business failures by advocating and embracing a new approach to risk management: enterprise risk management (ERM). ERM proposes the integrated management of all the risks an organization faces, which inherently requires alignment of risk management with corporate governance and strategy. Academic research on ERM is still in its infancy with articles largely in accounting and finance journals, but rarely in management journals. We argue that ERM offers an important new domain of research for management scholars. A critical review of ERM research allows us to identify limitations and gaps that management scholars are best equipped to address. The paper not only identifies how management scholars can contribute to ERM research, but also points out why ERM research (and practice) needs management research for its development.