Company Risk Research Articles

Healthcare Supply Chain: Understanding the significance of Risk Culture

Healthcare supply chains are the foundation of modern healthcare systems, assuring the timely availability of vital drugs, equipment, and resources required for patient treatment. The efficiency and robustness of these supply chains, which are driven by the underlying risk culture, have a direct impact on patient outcomes, operational efficiency, and overall healthcare quality. This study investigates the significance of supply chain risk culture in order to identify its impact on supply chain capabilities and performance. This includes the attitudes, beliefs, and practices that determine a company's risk management strategy inside its supply chain, as well as how it perceives and responds to uncertainty. The research study gathered 294 samples from hospital employees in selected hospitals to evaluate the qualities that impact Supply Chain performance, with a focus on agility, collaboration, and adaptability. In the healthcare industry, supply chain capabilities have been shown to have a significant influence on hospital performance. Risk culture also had a substantial negative moderating effect on the connection between SC capability and SC performance. A severe aversion to risk, to put it simply. The relationship between supply chain capabilities and SC performance is weakened by risk culture when it takes a high value, and vice versa.

Determinants of Bond Performance (Study of Companies Listed on the Indonesian Stock Exchange)

Bond ratings are critical for firms that issue them, as they reflect the company's risk level. A higher bond rating typically leads to lower costs for the company. Most investors tend to avoid bonds with poor credit ratings. This research aims to examine how profitability, liquidity, and leverage influence bond prices, using bond ratings as a key variable. The study population comprises all firms listed on the Indonesian stock market from 2019 to 2021, totaling 116 entities. Through purposive sampling, the research focused on 72 companies that met specific criteria: firms that issued reports in rupiah, generated profits, and were rated by PT Pefindo. The study employed path analysis to test the hypotheses. The findings reveal that profitability, liquidity, and leverage have minimal impact on bond ratings. Furthermore, changes in liquidity and leverage do not affect bond prices. However, profitability and bond ratings significantly influence bond prices. The study also shows that bond ratings do not mediate the effects of liquidity and leverage on bond prices. Nonetheless, bond ratings reflect the yield of bond prices. In conclusion, this study finds that while profitability, liquidity, and leverage do not significantly affect bond ratings, bond prices are influenced by profitability and bond ratings. The practical implications suggest that bond ratings and bond prices play a pivotal role in enhancing company performance, particularly in terms of managing liquidity to meet interest and installment obligations and leveraging strategies to boost income.

Managing the risk of continued operation with out‐of‐service safety instrumented system devices

AbstractSafety instrumented systems (SIS) are used to reduce the frequency of hazardous events in the process industry. When SIS equipment has a detected failure or requires online maintenance, the processing facility must decide whether to continue operation or shut down. Continued operation can pose risks beyond what was deemed acceptable as per the company's risk criteria. Understanding the peak risk is important to ensure that all stakeholders are aware of the risk and have compensating measures that ensure continued safe operation until the SIS equipment is returned to service. The paper proposes using Peak Risk Analysis (PRA) to identify unacceptable risks and to document the compensating measures required to support continued safe operation with out‐of‐service SIS equipment.

Value Research of HYBE Entertainment

Abstract: With the development of economic globalization, Korean entertainment companies occupy an increasingly important position in global entertainment. Under the fierce competition among Korean entertainment companies, HYBE has created several standouts K-pop groups in the past few years, thereby breaking the pattern of the three major entertainment companies, YG, SM, and JYP. HYBE has attracted a predominantly youthful crowd mainly with its unique music aesthetic, versatile group styles, and frequent returns, and has made efforts to expand its presence from the Korean domestic market into the U.S. market, where it has become a major player. It is also trying to expand its sales from the Korean domestic entertainment market to overseas markets, mainly the United States. Despite the controversy surrounding some of HYBE's groups, which has raised the company's operational risk, the company's groups have gradually gained a significant position in global entertainment. This article analyzes the value of HYBE from the perspectives of profitability and business analysis, describes the current state of the company's development, and explores the reasons for its steady growth.

The literature review on Corporate innovation

Innovation plays a substantial role in value creation and economic development. Given its importance, this paper systematically reviews the determinants and consequences of corporate innovation. This paper finds the factors mainly related to business management and the economic sphere, including strategic management, innovation, competitive environment, intrapreneurship, corporate governance, leadership, industry influences, and cultural factors. The consequences of corporate innovation can be summarised in terms of the company's financial position and risk management, like the risk of a share price crash, more internal financing, and the company staying ahead of the curve. This paper enriches the literature on corporate innovation by systematically summarizing the factors affecting innovative activities. The paper presents a comprehensive analysis of the implications that listed firms and the government can consider to promote or facilitate corporate innovation. Firms can foster innovation by investing in R&D, fostering a culture of creativity and experimentation, and collaborating with external partners. The government can promote a culture of innovation that drives progress and growth by offering funding, tax incentives, and regulatory frameworks that incentivize companies to invest in new technologies and ideas. Overall, the paper underscores the importance of innovation in driving economic growth and offers practical recommendations for firms and policymakers to foster innovation and competitiveness.

Frontier AI developers need an internal audit function.

This article argues that frontier artificial intelligence (AI) developers need an internal audit function. First, it describes the role of internal audit in corporate governance: internal audit evaluates the adequacy and effectiveness of a company's risk management, control, and governance processes. It is organizationally independent from senior management and reports directly to the board of directors, typically its audit committee. In the Institute of Internal Auditors' Three Lines Model, internal audit serves as the third line and is responsible for providing assurance to the board, whereas the combined assurance framework highlights the need to coordinate the activities of internal and external assurance providers. Next, the article provides an overview of key governance challenges in frontier AI development: Dangerous capabilities can arise unpredictably and undetected; it is difficult to prevent a deployed model from causing harm; frontier models can proliferate rapidly; it is inherently difficult to assess frontier AI risks; and frontier AI developers do not seem to follow best practices in risk governance. Finally, the article discusses how an internal audit function could address some of these challenges: Internal audit could identify ineffective risk management practices; it could ensure that the board of directors has a more accurate understanding of the current level of risk and the adequacy of the developer's risk management practices; and it could serve as a contact point for whistleblowers. But frontier AI developers should also be aware of key limitations: Internal audit adds friction; it can be captured by senior management; and the benefits depend on the ability of individuals to identify ineffective practices. In light of rapid progress in AI research and development, frontier AI developers need to strengthen their risk governance. Instead of reinventing the wheel, they should follow existing best practices. Although this might not be sufficient, they should not skip this obvious first step.

Case Study of a State-Owned Company: How does Centralized Procurement affect Operational Risk?

This study aims to understand that the restructuring of the BUMN has a significant impact on the operational activities of the NUMN, along with its risks. The researchers used data saving from the procurement centralization process as an indication of the company's operational activities before and after restructuring. While variabel current risk exposure to indicate the conditions of the company's operational risk. Procurement centralization mechanisms tend to change before and after restructuring. So it gives the contractor his own sentiment about the operational risks and obstacles in the process. The data used refers to the company's monitoring report. Modeling between saving and current risk exposure uses double regression analysis. The results also indicate that changes in procurement centralization mechanisms have a significant impact on the company's operational risk. So in order to meet risk mitigation, the company should specifically regulate the mechanism of centralization of procurement between business groups.

Earnings Management As A Moderator On The Effect Of Information Asymmetry On The Cost Of Equity Capital

To maximize the company's value, management must aim to reduce the Cost of Equity Capital (CEC) as much as possible. Investors will assume that the company's risk is low when the CEC is low, which in turn will enhance the company's value. However, the reality in Indonesia shows the opposite; the CEC of companies has been increasing year after year. Based on this phenomenon, it is necessary to examine the factors influencing CEC. Agency theory suggests that information asymmetry and earnings management can affect CEC. This study aims to test the direct effects of information asymmetry on CEC and earnings management on CEC, as well as the indirect effect of information asymmetry on CEC using earnings management as a moderating variable. The results of the data analysis show that information asymmetry affects earnings management and CEC. Furthermore, it was found that earnings management does not affect CEC. However, earnings management can moderate the relationship between information asymmetry and CEC

Market Valuation of Risk Reporting: The Role of Business Model Disclosure

Narrative risk reporting is essential to providing investors with information about company risks. Recent regulations require large companies to disclose narrative information about their main risks, opportunities, and business model (BM) value drivers. While only minimum disclosure requirements are defined, principle‐based guidelines have suggested that companies contextualize risk disclosure by linking it to BM information. Hence, this study investigates the level of integration of BM reporting and risk reporting, and the consequences of such an integration on market values. This research analyzes the annual reports of a sample of UK‐listed companies over four years. Risk disclosure indexes are developed to capture the quality and integration of risk information, and value‐relevance analyses are carried out to investigate the impact of risk reporting on market values. The analyses indicate that narrative risk information is value relevant only when integrated with BM reporting. Additional analyses show that risk information is associated with reduced information asymmetry but only when disclosed risk factors are related to BM information. Hence, BM disclosure can serve as a filter to identify and interpret the most relevant company's risks. The results are valuable to various stakeholders, including academics, standard setters, and professional bodies. The study's policy implications suggest the need to develop guidelines clarifying the definitions of BM and risk and ways to integrate the narrative information, in light of recent regulatory developments in the EU.

Financial Factors and Beyond: A Survey of Credit Risk Assessment for VSBs by Moroccan Banks

This article analyzes the extent to which Moroccan banks adopt a holistic approach to credit risk assessment, incorporating criteria that go beyond simple balance sheets and financial ratios. To this end, Multiple Correspondence Analysis and advanced statistical techniques were employed using R software. A detailed questionnaire comprising 14 questions, was distributed to a sample of Moroccan bankers. The results of this analysis reliably confirm our initial hypotheses. They reveal a growing trend among Moroccan banks towards a more complex and nuanced assessment of credit risk. In addition to traditional financial aspects such as financial statement analysis, banks are increasingly considering non-financial criteria such as collateral requirements, quality of corporate governance, sustainability of business practices, and technological positioning. This diversified approach gives banks a more accurate and comprehensive view of a company's risk profile. It also enables them to make better-informed and more balanced lending decisions, considering the multitude of factors that can influence a company's ability to repay.

Research on Random Forest Model and Support Vector Machine Model in Financial Risk Early Warning of Listed Companies

On October 30, 2023, the Central Financial Work Conference was held in Beijing. One of the important contents of the meeting was to prevent and control financial market risks. Because the sustainable development of a company is closely related to the financial market , the company faces increasing financial risk challenges , and it is particularly urgent to establish and optimize an effective financial risk early warning mechanism. The establishment of a financial crisis early warning model can not only enable company managers to adjust the company's development strategy and direction in a timely manner, improve the company's performance, and reduce the company's financial risks, but also predict corporate financial crises, which can help investors evaluate the company's potential value and change the direction of investment. This paper takes the establishment of random forest model as the starting point . First, we understand the theoretical framework of financial risk of listed companies; second, we explain the theoretical basis and advantages of establishing random forest model; then, we deeply explore the theory and empirical analysis of risk indicators; then, we use support vector machine in the specific application of financial risk warning; finally , we get the theoretical analysis and empirical significance of its feature importance, as well as the limitations and future research directions of the method under the fusion of random forest model and support vector machine.

Do Anglo‐Saxon directors affect leverage?

AbstractWe investigate the impact of Anglo‐Saxon directors on leverage of Swiss listed companies. Higher leverage increases a company's risk profile, and individuals with an Anglo‐Saxon cultural background are considered less risk averse than others. Using a sample of 1556 firm‐year observations from 2005 to 2015, we find empirical evidence supporting our hypothesis that Anglo‐Saxon directors increase leverage. The result is robust to the inclusion of a battery of control variables, fixed effects, and instrumental variable estimation.

A Financial Analysis and Valuation of Diamondback Energy

Because of the importance of its products and huge value, the oil and gas industry itself occupies an important position in the national economic system. However, the development of this industry is unbalanced and insufficient, with large differences in market size, liquidity, solvency, profitability, valuation, and growth potential, and few companies have achieved good performance in all of these dimensions. This study delves into the unbalanced development and varied performance metrics among key petrochemical companies listed in the U.S. stock market, utilizing both fundamental analysis and non-financial analysis method, as well as to conduct a specific study on the competitive situation of Diamondback Energy. This study has elucidated that Diamondback Energy lags behind its peers in terms of liquidity and solvency. However, it is worth noting that despite macroeconomic challenges such as economic downturns and industry-wide downturns, its profitability remains relatively strong within the industry. Additionally, it holds a certain advantage over its peers in terms of financial valuation and growth potential, making it a growth-oriented enterprise. The study suggests that investors should consider market volatility and the company's management risk when entering the oil and gas industry in order to maximize returns.

Effect of Debt Policy And Company Performance With Leverage As Moderation

This research aims to determine the role of leverage as a moderating variable in the influence of debt policy on company performance. This research uses quantitative methods with secondary data obtained from the Indonesia Stock Exchange website and the company's official website. The population in this research is food and beverage companies in the consumer goods industry sector listed on the Indonesia Stock Exchange in 2019-2021. Panel data regression analysis testing uses STATA 17. The analytical method used is multiple regression analysis (MRA). The results of this research show that: 1) Debt policy has a negative effect on company performance. Excessive use of debt causes an increase in the company's risk in generating profits and will cause shareholders to doubt the company's ability to pay the debt that has been given. This shows that the higher the debt a company has with a large amount of debt, the higher the company's risk will be and this will result in decreased financial performance, because higher debt will cause financial distress. 2) Leverage weakens the relationship between debt policy and company performance. Leverage weakens the influence of the negative relationship, which shows that the DOL functions well in mitigating the negative impact of debt policy on company performance so that the negative influence of debt policy on company performance can be reduced or weakened

Affiliated guarantee risk control and firm cash holdings: Evidence from China

As an inseparable part of a company's business risk, the ability to reduce the impact of affiliated guarantee risk on business decisions has become a topic of great concern to governments. This paper focuses on the “Circular on Enhancing Risk Prevention and Mitigation of Loans from Corporate Guarantee Circles” (ERPML) and explores its impact on affiliated guarantee risk control and firms' cash holdings. The findings suggest that affiliated guarantee risk control increases firms' cash holdings, a conclusion supported by robustness tests. This increase is primarily driven by preventive motives and the reduction of shareholders' agency costs. The heterogeneity test indicates that the influence of affiliated guarantee risk control is more pronounced in nonstate-owned firms and firms with low institutional shareholding, low debt financing and low financialization. Finally, the economic results suggest that affiliated guarantee risk control helps reduce firms' business risks and improve their performance. Overall, this paper provides empirical evidence of the positive economic consequences of strengthening the regulation of associated guarantee risk.

Pengaruh Audit Internal Terhadap Penekanan Resiko Literature Review Artikel Terindeks Sinta

In this qualitative study, it became clear that an evolution towards a higher level of risk-based auditing is absolutely necessary, if internal auditors are to play an important role in risk management. The implementation of effective risk management is the key to the success of a company. This article aims to provide a literature review related to the role of the internal auditor function in carrying out effective and efficient risk management. The explanation of this article can add to the literature related to the role of internal auditors in implementing corporate risk management and can assist company management in selecting internal auditors so that company goals can be achieved. Thus, the company can have an optimal level of risk according to the company's risk appetite. Internal auditors are also required to uphold the professional standards of internal audit in carrying out their duties so as to provide the best guarantee for the company.

Climate risk disclosures and auditor expertise

Many jurisdictions are establishing requirements for corporations to disclose climate-related risks, and for those disclosures to be audited. One of the first jurisdictions to do so is Australia, where the Australian Accounting Standards Board (AASB) and Auditing and Assurance Standards Board (AUASB) issued a Joint Bulletin in 2018 stating that both preparers and auditors should consider the impact of climate risks on the company's financials. Utilising the Australian setting, this paper introduces a new measure of audit partner expertise, namely expertise in climate-related issues, and examines whether it is associated with the client company's climate risk reporting. We define audit partner expertise in climate-related issues based on their client portfolio composition in terms of greenhouse gas emissions. We find that the likelihood and quality of climate risk disclosures is higher when the audit partner has climate risk expertise, and this finding is driven by clients in industries with material climate risks.

Analysis of Huawei's Financial Risk Management from the Perspective of Financial Indicators

With the continuous development of China's socio-economy, overall enterprise growth faces certain limitations; deeper economic reforms and market opening create a more challenging external environment for businesses. This implies that companies will encounter more challenges. To ensure that enterprises can operate normally and successfully achieve their business objectives, it is necessary to correctly understand financial risks and adopt rational risk management methods to avoid or reduce potential losses. This paper takes Huawei Technologies Co., Ltd. (hereinafter referred to as "Huawei") as an example and analyzes its financial indicators. Through financial data, it identifies the issues and causes of the company's financial risk management, and discusses how to prevent financial risks in enterprises, aiming to assist companies in achieving sustainable development in a fiercely competitive environment.

A Comparative Analysis of Cosmetics Companies

This paper focuses on three cosmetics companies: Coty, Johnson & Johnson, and Estee Lauder. First of all, we collected some questionnaire survey data, in 2021, 68% of respondents believe that the price of beauty products is more important, 56% of respondents believe that appearance is first, and only 8% are strongly influenced by advertising. Therefore, we believe that the influence of advertising is declining, and the quality of the product itself and the comprehensive competitiveness of the enterprise are becoming more important. Then we learned more about the background and history of the three companies. We then analyze each company's raw material issues, which can reflect each company's target market, operations and business risks. In addition, we analyzed pricing, which can reflect the target product market and product depth of different makeup companies. Not only that, the company's business orientation and forward-looking is also what we need to understand. Finally, after synthesizing the above analysis, we believe that Coty's business risk is the largest, and the other two are not different.

The Influence of Artificial Intelligence and Digital Technology on ESG Reporting Quality

Environmental, social, and governance (ESG) reporting is crucial for conveying a company's sustainability performance. However, challenges related to standardization, consistency, and data quality persist. This study explores the potential of artificial intelligence (AI) and digital technology to enhance ESG reporting by addressing these challenges. AI and digital technology utilize advanced tools like natural language processing, machine learning, data analytics, and blockchain to streamline data collection, improve quality, and facilitate communication. Regression analysis using A-share listed companies' data from 2012 to 2021 examines the relationship between digital transformation and corporate ESG performance. The research emphasizes the implications of ESG reporting, AI, and digital technology for corporate management, risk assessment, shareholder value, and social responsibility. AI and digital technology are vital for growth, innovation, efficiency, and competitiveness. ESG reporting significantly impacts a company's risk profile, reputation, performance, and overall value, contributing to sustainable development. Through a comprehensive review, methodology exploration, and in-depth analysis, this study provides valuable insights and recommendations for leveraging AI and digital technology in advancing ESG reporting. It concludes that implementing AI and digital technology enhances the comprehensiveness and assurance level of ESG reporting.