Abstract
This study investigates risk management practices in public entities in the Ghana. We relied on the popular framework designed by the Committee of Sponsoring Organizations of the Treadway Commission—COSO, to advocate for possible ways to minimize the occurrence and effects of risk in public organizations. The internal control elements used include: control environment, commitment to ethics, segregation of duties, review and information and communication. These constitute the explanatory variables used in performing multivariate data analysis to determine the dimensionality of the data set and possible outcomes. The exploratory research followed a quantitative approach using the survey method and a structured equation model. We established that, due to globalization and increases in the scale of operations, it is practically impossible for management through the help of auditors and those in charge of governance to validate the entire operations of the public sector to ensure strict compliance to internal control principles, in order to minimize the detrimental impacts of risk. However, an alternative sustainability depends on the prominence of quality financial reporting, compliance, commitment to ethical values and consistency in pursuit of the strategic and operational objectives based on good corporate governance. On the other hand, the implications of risks should be embedded in the minds of public servants as part of the organizational culture that will complement existing tools and techniques of internal control.
Highlights
The emergence of organizational risks management has gained significant popularity in theory and real life application in recent years regarding the performance of corporate and public sector entities (Ahsan and Rahman 2017; Aliewi et al 2017; Arena et al 2017; Ge et al.)
A couple of decades ago, it took very large corporate scandals before the concept of internal control, corporate governance and risk management were revisited with positive interventions such as the passing of Sarbanes Oxley Act in 2003 in America, the corporate governance principles developed by the Organization for Economic Cooperation and Development (OECD), the UK Corporate governance code and more recently the updated internal control and risk management framework of the Committee of Sponsoring Organizations of the Treadway Commission—COSO in 1992–2013 (Collier 2009a, 2009b; Hagigi and Sivakumar 2009; Martin et al 2014)
The result (Table 2) reaffirms the importance of demonstrating a commitment to ethical values and a control environment as key determinants of positive risk attitude that would align the activities within the organization to ethical practices that will minimize the occurrence of risk (Ashraf and Uddin 2016; Axelsen et al 2017)
Summary
The emergence of organizational risks management has gained significant popularity in theory and real life application in recent years regarding the performance of corporate and public sector entities (Ahsan and Rahman 2017; Aliewi et al 2017; Arena et al 2017; Ge et al.). Owing to deficiencies in internal control and the emergence of risk, the corporate environment experienced the most turbulent events involving the failure of Enron, a leading energy company, WorldCom and more recently Lehman brothers, one of the largest banks in the US The main causes of these corporate demises were attributed to non-compliance and disregard for ethical practices, managerial greed, internal control lapse, and weak corporate governance standards (Aziz et al 2015; Themsen and Skærbæk 2018)
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