Corporate Risk Management Research Articles

Review of The Role Company Supervision Mechanism in Risk Management Implementation

This study reviews the supervisory mechanism carried out by the company in the implementation of risk management. This research is qualitative research with literature study method. As a result, internal auditors, audit committees and management accountants work together in supervising the implementation of risk-based audits. Internal auditors have a weak contribution because they prefer a supervisory approach so they are supported by the audit committee. The audit committee supervises the internal auditors and provides suggestions for the next audit process so that it can cover high-risk areas. Meanwhile, the external auditor supervises by ensuring whether the financial statements are presented fairly. This research contributes to expanding the study of the role of supervisory mechanisms in companies for the implementation of corporate risk management.

Corporate hedging and the variance of stock returns

By means of a difference-in-differences approach on the volatility of stock returns (σ-DID), we investigate the effect that hedging has on corporate risk. Examining the relation between hedging and the idiosyncratic variance of stock returns, we show that when new commodity derivatives are introduced in the Chicago Mercantile Exchange (CME), firms with exposure to the commodities experience up to a 40% drop in the idiosyncratic variance of stock returns. The effect is persistent over time and it is associated with real effects: firms that hedge more also experience an increase in profit margins, investment, access to credit lines, and a drop in cash holdings. Our results establish a direct link between corporate risk management policies and stock return behavior.

Board attributes, ownership structure and risk management: A proposed model for insurance firms in Nigeria

As a response to the weaknesses in corporate governance and risk management created by the 2007/2008 financial crises, Enterprise Risk Management (ERM) becomes imperative, especially in the financial sector. Therefore, in understanding the board's responsibility in ensuring good governance through ERM implementation, two fundamental questions need to be answered; what determines the makeup of the board? And what determines boards' action? Consequently, this study proposed a conceptual framework for investigating the moderating role of ownership structure on the relationship between board attributes and risk management of insurance firms in Nigeria using the model approach. Hence, the control, resource acquisition, and service roles of the board as explained by agency, stewardship, and resource dependence theories explain this relationship. Board attributes are measured by board composition, board structure, board characteristics, and board process, ownership structure is measured by ownership concentration, board ownership, and foreign ownership, and ERM is measured using the disclosure index. Findings from the review of literature reveal that governance attributes in board attributes-risk management relationships have been measured on single or fragmented criteria, leading to contradictory or conflicting findings. Hence, the significance of the study lies in the conceptualization and choice of board attributes as explained by board roles and an integrative theoretical perspective to propose the choice of board attributes in the board attributes-risk management relationship and how ownership structure can influence the relationship, adding to the existing literature onboard attributes, ownership structure, and risk management.

Relationship between Corporate Governance and Risk Management

Relationship between Corporate Governance and Risk Management

Food safety vs health and safety

Food safety vs health and safety

HOW SIGNIFICANT THE INFLUANCE OF VOLUNTARY RISK MANAGEMENT DISCLOSURE AND ITS IMPLICATION TO COMPANY VALUE

The aim of this research is to examine the effect of voluntary risk management disclosure and its implication to firm value. Independent variables used in this research are product diversification, geographical diversification, type of industry and company size. Intervening variable is voluntary risk management disclosure. While the dependent variable in this study is firm value measured using Tobin’s Q. This research used a sample of non financial companies listed on the Indonesia Stock Exchange (IDX) in 2019. The sampling method in this research is purposive sampling and acquired 418 companies that meet the criteria. Hypothesis testing using multiple regression analysis. The results of this research showed that the higher the level of product diversification, geographical diversification, type of industry and company size, the higher the voluntary risk management disclosure. Voluntary risk management disclosure has a positive influential on firm value, the wider the disclosure of corporate risk management, will increase the firm value, otherwise the less disclosure of corporate risk management, will decrease the firm value or the value are getting worse.

Integrated Management System and Corporate Risk Management

The main motive for the integration of management systems should be to increase production efficiency by reducing losses due to overlapping resources of individual management systems running in parallel. In addition, by integrating, organisations can ensure the definition of unambiguous responsibilities and prevent problems at process interfaces as well as conflicting goals of individual management systems. The integration of management systems into one comprehensive and the implementation of an integrated system into the overall management of the organization would help to more effectively manage the risks associated with their business processes, resources and thus ensure prevention of these risks.

Features of enterprise risk management associated with operational risks

Purpose of the work: within the framework of the concept of corporate risk management Enterprise Risk Management (ERM) to study the basic types of risks, assess their role in the modern economy, analyze external and internal operational risks and propose approaches to their quantitative assessment. As a research methodology, it is proposed to use the developed tools of mathematical and numerical modeling, which allows one to obtain, in the key of interest to the decision maker, qualitative and quantitative characteristics of the dynamics of business processes. The operational and economic risks (as very often occurring in the activities of subjects of economic relations) and directly affecting their economic and information security are considered in sufficient detail. It is noted that the risks associated with disruption of business continuity (which enterprises face in their activities) can be included in various classification systems of risks, grouped according to various criteria. The need to identify the mismatch between the design and actual metrics of the organizational structure (establishment of its structure and operating schemes based on the needs of the enterprise/organization) is indicated for solving the optimization problem.

Odds-wise view: Whose ideas prevail in the global integrity campaigns against match-fixing?

The global expansion of sports betting has resulted in the formation of (inter)national governing regimes aimed at sustaining revenue and regulating attendant issues, including match-fixing. This article explores the workings of these regimes vis-à-vis the management of match-fixing issues in sport. More particularly, this article focuses on betting monitoring programmes as countermeasures against match-fixing and conceptualises these as social instruments that ultimately define issues and influence the wider integrity agenda of anti-match-fixing campaigns. Analysing documentary, observation and interview data from two disparate monitoring programmes, the results show that betting monitoring is a technical extension of corporate risk management, invariably reflecting the business interests of the betting industry. Therefore, the operating logic of betting monitoring defines match-fixing as an act of sabotaging the competitive edge of betting companies. Moreover, this interest-laden paradigm reigns within the broader policy agenda of sport integrity by equating the betting industry's interest with that of sport. From this, the article suggests that betting monitoring plays a part in the legitimation of commercial gambling by reframing the issue of match-fixing as a common enemy that gambling and sport join forces to combat, not a risk that gambling brings to sport.

VOLUNTARY RISK MANAGEMENT DISCLOSURE DETERMINANTS AND ITS IMPLICATIONS ON COMPANY VALUE

The aim of this research is to examine the effect of voluntary risk management disclosure and its implication to firm value. Independent variables used in this research are product diversification, geographical diversification, type of industry and company size. Intervening variable is voluntary risk management disclosure. While the dependent variable in this study is firm value measured using Tobin’s Q. This research used a sample of non financial companies listed on the Indonesia Stock Exchange (IDX) in 2017. The sampling method in this research is purposive sampling and acquired 418 companies that meet the criteria. Hypothesis testing using multiple regression analysis. The results of this research showed that the higher the level of product diversification, geographical diversification, type of industry and company size, the higher the voluntary risk management disclosure. Voluntary risk management disclosure has a positive influential on firm value, the wider the disclosure of corporate risk management, will increase the firm value, otherwise the less disclosure of corporate risk management, will decrease the firm value or the value are getting worse. Keywords: Product diversification, geographical diversification, type of industry, company size, voluntary risk management disclosure, firm value

Business analytics for corporate risk management and performance improvement

Business analytics for corporate risk management and performance improvement

Financial Performance of the Firms and the Enterprise Risk Management: A Sri Lankan Perspective

Risk management and financial performances in organizations had been of mounting importance when it comes to the research arena during the past few decades and is still heavily discussed globally nowadays. The tendency is to take an all-risk encompassing overview of risk management instead of considering risk management from a narrow-based overview. This all-risk encompassing approach to risk management is usually mentioned as Corporate Risk Management. A noticeable dearth of research is there in the studies that have been done on the relationship between corporate risk management and financial performance in organizations. There are so many shreds of evidence for the statement that organizations will enhance their performance by using the corporate risk management concept. The main objective instigated during this study is that the proper match between corporate risk management and, therefore, the firm factors: namely, industry competition, firm size, firm complexity, and monitoring by the board of directors and the relationship among corporate risk management and firm performance. This study identifies the impact of corporate risk management on financial performances of Banks, Diversified Financials, Insurance, Energy, and Retailing sectors in the Colombo Stock Exchange, which include 86 companies, were considered as the population and supported a sample of 60 firms. The research began with a search for companies that indicated they were utilizing the corporate risk management concept in their annual reports covering their fiscal year 2018. The findings indicate that firms should consider the implementation of a corporate risk management system following structural variables affecting the firm. These findings will be interesting to the policymakers, future researchers, as well as to the general public and any third party who are keen on corporate risk and financial performance of Banks, Diversified Financials, Insurance, Energy, and Retailing sectors in Sri Lanka.
 Keywords: contingency theory, corporate risk management index, firm performance, Sri Lanka

Measuring corporate management in business maturity forecasting models

Modern corporate theory interprets enterprise-wide risk management (ERM) as an agent between stakeholders and corporate governance. In accordance with the latest ERM framework, corporate risk management in business includes the methods and processes used by organizations to manage uncertainty and use the opportunities associated with achieving their goals. The aim of the study is to measure corporate management in business maturity forecasting models. The author predicted a company cluster based on signal to noise ratio. As the basic model, the author used the calculation method proposed by G. Taguchi to assess product quality as well as for the design and optimization of processes. The research method used for the study was empirical. The author obtained financial performance data relating to all 218 companies from the SPARK database. It was applied two-step cluster analysis to compare companies within the sample. Also, it was calculated the geometric mean for each quantitative variable to avoid the influence of temporary shocks and distortions. The results of a nonparametric test showed that the relationship between the signal-to-noise ratio (SNR) and ERM is significant. Thus, based on the results of the theoretical and empirical studies, we can argue that the measurement of ERM through the SNR is justified.

Corporate risk management and pension investment policy

In this paper, we study whether firms manage their pension risk exposures within an integrated corporate risk management framework or they manage their pension and firm risk exposures independently following the adoption of fair value pension reporting regulation (IAS 19). Controlling for known factors affecting the risk-taking in pension plan investments, we document a robust negative association both at the cross-section and over time between pension risk and firm systematic risk and operating asset risk during the post-IAS 19 adoption period. The findings suggest that firms manage pension risk as an integral part of firm risk, consistent with a coordinated risk management explanation. Overall, our evidence highlights that pension investment strategy is a dynamic process that is ultimately determined by sponsoring firms' strategic corporate risk management considerations and the important role that changing pension reporting regulation plays in shaping these dynamics. Our conclusions have potential wider implications for ongoing reforms in financial reporting and disclosure policy settings.

Can the risk management committee improve risk management disclosure practices in Indonesian companies?

This study examines the role of the risk management committee as a moderating variable. The risk management committee will moderate the relationship between firm size, profitability, ownership concentration, and the size of the Enterprise Risk Management (ERM) disclosure board. The study is based on agency theory, which discusses the relationship between management and company owners and shareholders. The research sample consisted of 56 manufacturing companies in Indonesia with 224 units of analysis obtained using the purposive sampling technique. It has been proven that the risk management committee can moderate the relationship between firm size and ERM disclosure and ownership concentration and ERM disclosure. Company size is known to affect the disclosure of risk management in a company. But ownership concentration shows different things, that is, it does not affect corporate risk management disclosures. The results also show that the risk management committee cannot moderate the relationship between profitability and the size of the board of commissioners on the company’s risk management disclosures. It has also not been proven that profitability and the size of the board of commissioners directly affect corporate risk management disclosures. Thus, it can be stated that the risk management committee plays a role in controlling the extent of the company’s risk management disclosures; this is necessary to maintain stakeholder trust in the company.

Modelling the Impact of Corporate Risk Management on Firms Financial Performance and Sustainable Growth: Evidence Grounded on Emerging and Developed Countries

Modelling the Impact of Corporate Risk Management on Firms Financial Performance and Sustainable Growth: Evidence Grounded on Emerging and Developed Countries

Corporate Governance and Risk Management: A Study of Board Structure in Indonesian and Singapore Companies

This study aims to determine the effect of the board structure on business risk management. One indicator that can show the implementation of risk management is risk disclosure by the company. This study uses a quantitative approach with the research population being companies in Indonesia and Singapore included in the ASEAN Stars 2015 – 2018. Furthermore, this study uses a regression analysis technique to examine the effect of the board structure on corporate risk management. The results of this study indicate that although the structure of the board of companies included in ASEAN STARS in Indonesia and Singapore has differences, the results of the analysis of the two are not much different. This study shows that an independent board of commissioners and the frequency of meetings have a significant effect on the company's risk management. Otherwise, the composition of the female board of commissioners is proven not to affect the risk management. Overall, the results also show an increase in corporate governance activities and an increase in risk management activities. The results of this study can be used as input for potential investors to evaluate quantitative information, and other qualitative information such as the role of the board of commissioners and risk disclosure can be useful in decision making.

Challenges of Integration Risk Management of Sustainability of Business Processes to Corporate Governance of the Company

The sustainability of risk management process discussed in this article is a business process that supports the company’s sustainability goals and aims to align sustainability with risk management based on corporate risk management principles. The associated risks are determined by the ESG practice of the company’s business, its strategy and the sector of the economy in which it operates. The Committee on Sustainable Development of FERMA in ESG considers environmental risks (climate, resources, pollution), social risks (people and communications, products and services, external and internal shareholders) and management risks (corporate governance, business ethics and behavior). Companies in the “sustainable development” phase take a corporate approach to ESG risks and link them to common strategic objectives. In the process of identifying ESG risks, it is possible to follow different approaches, in particular, maintaining a risk register, including ESG risks, or discussing the company’s various sustainability prospects with top management and shareholders and, associated risks, or sorting risks related to strategic, operational and external, taking into account the impact on the state of sustainability of the company and, finally, in-depth analysis of all sustainability risks can be performed, and identified risks can be tracked in a common registry along with other business risks. The risk assessment phase aims at potential risk by quantifying its probability of occurrence and impact. At the same time, the assessment of sustainability should be broader and multidimensional, the potential consequences for the company, its reputation and durability should be taken into account.

DETERMINATION OF CORPORATE RISK MANAGEMENT APPLICATION LEVEL: A SURVEY IN MANISA PROVINCE

In this study, it was aimed to research the levels of corporate risk management application in businesses operating in Manisa. For this purpose, a survey was conducted to investigate the awareness of corporate risk management of businesses in Manisa Organized Industrial Zone. The survey results were evaluated by multidimensional scaling and correspondence analysis. Corporate risk management managers of 56 businesses participated in the survey. According to findings, it is found that the corporate risk management practices of businesses are at Level 4, but there is a lack in which guidance or standard is adapted. Also, while corporate risk management can be mentioned as a formal and rules-based risk management process in businesses carried out by internal auditors, it is observed that there is no specific risk management process in businesses where other (board of directors, CEO, human resources, occupational health, and safety specialist, external support) are responsible. Besides, it is determined that there are no businesses with the COSO corporate risk management guidance published by the United States that could be adapted to large businesses among the businesses that responded to the survey.

Corporate Governance and Risk Management on Listed Banks, The Tanzania Perspective

The study was to assess on corporate governance and risk management in Tanzania. The study was guided by three objectives which were to assess if transparency, disclosure and audit have significant effect on risk management of the firm, to assess if the board of directors have significant effect on risk management of the firm and evaluate if the ownership structure have significant effect on risk management of the firm. Furthermore, we assess how corporate governance and particularly board of directors, ownership structure, transparency disclosure and audit can affect risk management practices in the context of Dar es Salaam stock exchange listed banks. By the use of a content in analysis approach, the level of exposing the risks in terms of likelihood, consequences of such risk and the strategies used for managing that risk were identified for each kind of risk by using attributes. The results show that corporate governance is related to board of directors, ownership structure, transparency, disclosure and audit play a positive significant and crucial role in establishing an integrative risk management approach. The results from data collected demonstrate that corporate governance has positive significant effect in determining the the good quality of risk management through the level of risk-taking in decisions, especially in terms of financial risks management.