THE INFLUENCE OF CHIEF RISK OFFICER ON THE EFFECTIVENESS OF ENTERPRISE RISK MANAGEMENT: EVIDENCE FROM OMAN

Hamdan Abdul Hafidh Al-Farsi

doi:10.32479/ijefi.8932

Abstract

This paper assesses the level of adoption and implementation of enterprise risk management (ERM) in Oman publicly listed companies and explores the influence of Chief Risk Officer (CRO) on ERM effectiveness. The data was collected using a structured questionnaire with a sample of 94 respondents including board of directors (BOD), chief executive officers (CEO), senior and junior management. The questionnaire was administered online using Survey Monkey for respondents to partake. Chi-square test, t-test, and Spearman rank correlation were used to validate the study hypotheses. The study found that there is a lack of awareness and knowledge of the procedures of enterprise risk management in most of the Omani publicly listed companies, and the level of adoption of ERM is at early stages. Moreover, the study confirmed that the Chief Risk Officer significantly influences and plays a key role in adopting and implementing ERM in the publicly listed companies in Oman. For Oman where there is a high dependency on oil, publicly listed companies are facing huge risk due to oil price volatility.

Highlights

Risk is associated with every decision of any organization, starting form board level strategic decisions to daily operational ones
The study adopted a quantitative approach to assess the level of adoption and implementation of enterprise risk management (ERM) in Oman publicly listed companies and to establish a relationship between the role of the chief risk officer (CRO) and ERM effectiveness
Respondents demonstrated a very high agreement with statements related to the fact that The CRO/ ERM Champion regularly meets with the senior executives to reinforce Risk Management in their daily activities; the CRO/ ERM Champion works with unit leaders to ensure the most significant risk compliance with the organization’s standards; the CRO/ERM Champion work with unit leaders to ensure that risk identification is included in the business plans; and the CRO/ERM Champion develops integrated procedures to report major risks to the board member

Summary

INTRODUCTION

Risk is associated with every decision of any organization, starting form board level strategic decisions to daily operational ones. Kousky and Kunreuther (2018) contended that as a response to the increasing expectation of the stakeholders, companies have changed the risk management approach, after the impact of global financial crisis of 2008. Al-Farsi: The Influence of Chief Risk Officer on the Effectiveness of Enterprise Risk Management: Evidence from Oman all types of risks within business organization The benefits of this process include creating a more risk-focused culture in the organization. In view of the above, this paper attempts to fill that research gap assessing the level of adoption and implementation of ERM in Omani publicly listed companies and establishing if the influence of chief risk officer (CRO) can be considered as a major factor in ERM effectiveness in publicly listed companies of Oman. The remaining of the paper is structured as follows: Section 2 presents the literature review and hypothesis development, section 3 provides the methodology, section 4 presents the results and discussion, and section 5 concludes

LITERATURE REVIEW

METHODOLOGY

CONCLUSION