Effective Risk Management Process Research Articles

Effect of Risks Management on the Financial Performance of Listed Deposit Money Banks in Nigeria

This study examined the effect of risk management on the financial performance of listed DMBs in Nigeria. Adopting correlation research design, the target population was all the listed DMBs in Nigeria as at 31st December, 2022 and were nineteen (19) in number. Out of the 19 banks, 16 were purposively selected as sample based on the criteria that, the bank must have been listed before 31st December 2017 and also have complete annual report and account over the period of five years from 2018-2022. The study used descriptive statistics and panel regression analysis to analyze the data collected, and the results of the analyses revealed that, credit risk management, market risk management and capital adequacy risk management have positive and significant effect on the financial performance of the listed DMBs in Nigeria over the period of the study. However, liquidity risk management was found to have negative but insignificant effect on the financial performance of the banks. Hence, the study concluded that; effective risk management have positive and significant effect on the financial performance of listed DMBs in Nigeria. Based on these findings, this study recommends that; the management of listed DMBs in Nigeria should improve and strengthen their liquidity management strategies, while keeping adequate watch on credit risk, market risk, and capital adequacy risk to further improve their financial performance. Therefore, further studies could look into the effect of effective risk management process (risk identification, assessment, monitoring, and controlling process) on the financial performance of DMBs. Also, future studies could consider the impact of the adoption of IFRS on risk management and financial performance of listed DMBs in Nigeria.

How to design an AI ethics board

AbstractThe development and deployment of artificial intelligence (AI) systems poses significant risks to society. To reduce these risks to an acceptable level, AI companies need an effective risk management process and sound risk governance. In this paper, we explore a particular way in which AI companies can improve their risk governance: by setting up an AI ethics board. We identify five key design choices: (1) What responsibilities should the board have? (2) What should its legal structure be? (3) Who should sit on the board? (4) How should it make decisions? (5) And what resources does it need? We break each of these questions down into more specific sub-questions, list options, and discuss how different design choices affect the board’s ability to reduce societal risks from AI. Several failures have shown that designing an AI ethics board can be challenging. This paper provides a toolbox that can help AI companies to overcome these challenges.

Reviewing the Framework of Risk Management: Policy and Hedging

Purpose: The main purpose of this study is to evaluate different policies for managing the business risks in an effective manner. Theoretical framework: In order to identify the hazards within the organization and evaluate several risk factors, risk management is necessary. This is a method of “analysing and evaluating” the risks, which are associated with the hazard. After making identification the risks need to analyse properly. Evaluation of the risks is based on the position and activities of the firms. Hazard identification is a process of finding out the hazards, then making a list of those hazards and after that characterizing. Design/methodology/approach: The deductive approach is the best approach to understand the structure of the study. The deductive approach focuses on the evaluation of different theoretical views for finding out the pattern related to the generic views of a particular research topic. Findings: It is identified that the risk management is one of the major parts of business companies, which creating specific policies. The usage of hedging can lead to an effective risk management process. Research, Practical & Social implications: Businesses can benefit more from a strong foundation for managing risks. Risk assessment is applicable to all industries and is not just related to businesses or companies. Originality/value: This study is different from the previous studies because it examined the risk management framework (policy and hedging) in detailed way.

МЕТОДИ ОЦІНКИ ФІНАНСОВИХ РИЗИКІВ В СИСТЕМІ ПУБЛІЧНОГО УПРАВЛІННЯ

The article notes the importance of state internal financial control as a public administration tool, explores the essence of financial risk in the public administration system. In general, risk management can be viewed as a specific management process consisting of several stages, namely: stage 1 - risk identification (for implementation, it is necessary to have a wide range of practical and theoretical knowledge in this area, qualitative and quantitative approaches); Stage 2 - making a decision regarding the risk assessment method, risk assessment (there are three groups of assessment methods: economic-statistical, expert, analog); Stage 3 - making a decision on methods of influencing the risk (method of managing or avoiding risks, or preventing damage, or redistributing risk, or taking on the risk in accordance with the financial capabilities of the enterprise and the total amount of potential losses); Stage 4 - implementation of the selected methods of influencing the risk and adjusting the risk management system at the enterprise after monitoring the management results. It was found that the second stage has the main influence on the decision-making results, provided that the risk assessment methods and their main techniques (tasks) are correctly compared. As a result of the analysis of existing methods and models for assessing financial risks, it was found that expert methods dominate in practice. In general, it was noted that an effective financial risk management process is an important condition for improving the public administration mechanisms existing in Ukraine. It has been determined that premature monitoring of the effectiveness of all stages of the financial risk management process, taking into account “weak points” forms the basis for timely adaptation to them. The lack of this ability can be the main cause of emerging crisis situations in public administration.

"Fertility" of Agricultural Risk Insurance in Armenia

For a sustainable and balanced development of the agricultural sector effective risk management process is a key point to create fertile ground for the further development of the insurance process. Current challenges that the agricultural sector is faced with, dependence on natural disasters and other factors hindering sustainable growth, force us to develop models that will be fostering the sector's progress. Based on international experience the insurance system is one the most effective tools to promote the stability and further development of the agricultural sector. The main factor to improve agricultural productivity is the possibility of loss compensation which can be created due to the proper implementation of the insurance process. The new situation created as a result of the implementation of pilot programs of agricultural insurance in the Republic of Armenia, their effectiveness, and, very importantly, main benefits are comprehensively presented in the paper. What are the results of the implementation of agricultural insurance in the Republic of Armenia? How can the current situation be changed? What steps should be taken to set new development guidelines? The answers to these and many other important questions can be found in the research․

Impact of Risk Management towards Sustainability of Microfinance Industry in Sri Lanka: A Case Study

Purpose of the study: The microfinance industry has been developed significantly last two decades. It is fast becoming a household name globally and one of the key contributors to social-economic development. The Sustainability of the microfinance industry depends on several factors and encounters numerous challenges. The purpose of the study is to examine whether there is a relationship between risk management and the sustainability of the microfinance industry in Sri Lanka. Methodology: A simple regression analysis is used to demonstrate a connection in which one independent variable is predicted to influence one dependent variable. The study included 376 microfinance women borrowers from three districts in Sri Lanka, and the cluster sampling approach was used. Primary data was gathered using surveys, while secondary data was collected from CBSL, MFI annual reports, and the Microfinance Information Exchanger (MIX). Main Findings: The study findings reveal that effective risk Management has a significantly positive relationship with the Suitability of the Microfinance Industry in Sri Lanka. Research limitations/implications: The study was limited to three districts out of 25 districts in Sri Lanka, and the sample frame was selected from three leading MFIs that agreed to participate in the research. The availability of time for this study was limited and could not permit the consideration of all MFIs and the entire country. Novelty/Originality: The study concludes that MFIs should have a proper and effective risk management process, but it should be adequately handled and communicated to borrowers. It implies that proactive risk management is essential to the long-term Sustainability of microfinance institutions (MFIs).

Impact of Financial Risk Management Practices on Islamic Banks Performance in Pakistan

In current era, an effective risk management process is the basic requirement to perform better financial performances. Once the risk has been recognized, then organizing the risk is one of the main objectives to be done. The relationship between risk and return is associated with each other. In Islamic finance, reward cannot be obtained without risks i.e., more risks more rewards and vice versa. The key objective of the current study is to investigate the impact of the financial risk management practices (RMPs) on the Islamic banks (IBs) financial performance in Pakistan. To achieve the main objectives, this research measures the existing RMPs of the IBs and associate these RMPs with the IBs financial performance. This is a dynamic study that has researched both primary and secondary data. To proxy the IBs financial performance, return on assets (ROA) stood average for six years (2014-2019). An adapted questionnaire is distributing among the IBs risk managers for measuring the financial risk management practices of IBs. The methodology of this study comprises on the analysis of data using the analysis of multiple regression and correlation analysis. The results are display in tabulated form and mathematical regression equations. The current study identifies that practices of IBs in Pakistan indicates better financial risk management, resultantly these RMPs discloses the optimistic relationship with IBs financial performance. The study on financial performance recommends that IBs should plan and attempt the advanced techniques and process of risk measurement in IBs. To mitigate the financial risk, the current study proposes to trained the IBs managers with modern techniques which will be very useful and valuable for the IBs financial performance. Keywords: Risk Management, Islamic Banks, Financial Risk, Financial Performance DOI: 10.7176/RJFA/12-14-02 Publication date: July 31 st 2021

Applying a Refined Approach to Cybersecurity Risk Assessments to the GE MAC VU360

An effective medical device cybersecurity management plan is built upon having an effective and thorough risk management process. Protecting medical devices and the information they store begins by understanding the potential risks that may affect the device and the impact those risks may have on patient safety, treatment care delivery, and the organization's business objectives. Risks to medical devices must be identified, analyzed, evaluated, controlled, and then monitored so that the devices are secure and reside in a protected environment. The first 3 of these risk management elements comprise what is known as a risk assessment. Here, available information is used to identify hazards and estimate their risk. These estimations are compared with documented risk criteria to evaluate the acceptability of each risk. The overarching goal of risk assessment is to gather all the information necessary to measure the applicable cybersecurity risks to a specific type or class of medical devices and then use a risk scoring matrix to prioritize risks with high severity and exploitability. Risks with a higher score are then addressed first to establish a risk mitigation plan to control the risk to an acceptable level.

Safety risk management for low molecular weight process-related impurities in monoclonal antibody therapeutics: Categorization, risk assessment, testing strategy, and process development with leveraging clearance potential.

Process‐related impurities (PRIs) derived from manufacturing process should be minimized in final drug product. ICH Q3A provides a regulatory road map for PRIs but excludes biologic drugs like monoclonal antibodies (mAbs) that contain biological PRIs (e.g. host cell proteins and DNA) and low molecular weight (LMW) PRIs (e.g., fermentation media components and downstream chemical reagents). Risks from the former PRIs are typically addressed by routine tests to meet regulatory expectations, while a similar routine‐testing strategy is unrealistic and unnecessary for LMW PRIs, and thus a risk‐assessment‐guided testing strategy is often utilized. In this report, we discuss a safety risk management strategy including categorization, risk assessment, testing strategy, and its integrations with other CMC development activities, as well as downstream clearance potentials. The clearance data from 28 mAbs successfully addressed safety concerns but did not fully reveal the process clearance potentials. Therefore, we carried out studies with 13 commonly seen LMW PRIs in a typical downstream process for mAbs. Generally, Protein A chromatography and cation exchange chromatography operating in bind‐and‐elute mode showed excellent clearances with greater than 1,000‐ and 100‐fold clearance, respectively. The diafiltration step had better clearance (greater than 100‐fold) for the positively and neutrally charged LMW PRIs than for the negatively charged or hydrophobic PRIs. We propose that a typical mAb downstream process provides an overall clearance of 5,000‐fold. Additionally, the determined sieving coefficients will facilitate diafiltration process development. This report helps establish effective safety risk management and downstream process design with robust clearance for LMW PRIs.

Cyber Supply Chain Risk Management: Toward an Understanding of the Antecedents to Demand for Assurance

ABSTRACTRecognizing the need for effective cyber risk management processes across the supply chain, the AICPA issued a new SOC in March 2020 for assuring cyber supply chain risk management (C-SCRM) processes. This study examines supply chain relationship factors and cyber risk issues to better understand the demand for C-SCRM assurance. Resource-Advantage Theory of Competition provides the conceptual foundation for assessing the dual drivers of relationship building and cyber risk management on demand for assurance. We use a field survey to collect data from 205 professionals enabling evaluation of the complex relationships in the theoretical model. Results support all hypotheses, provide satisfactory model fit, and support the underlying theory. Trust and cyber supply chain risk both positively influence demand for assurance over C-SCRM processes. This study expands the literature on cyber assurance by auditors and elaborates on overall supply chain processes that help drive value from auditors providing such assurance.

An investigation of risk management practices in electronic banking in Sultanate of Oman

The growth in Internet has led to expansion of e-banking, forming online services, like financial services, account opening and facilities (Kolodinsky et al, 2004). Banks manage risks in some areas like: strategy, credit, market, liquidity etc. (Gorgisco, 2006). However, the growth of e-banking become vulnerable to the challenges it faces. All organisations conducting their business on-line have to focus on controlling the associated risks; e-banking is no exception. Malisuwan (2006) categories these e-banking risks into three main areas to be managed: Board and Management Oversight, Security Controls and Legal and Reputational Risk Management based on the fourteen “risk management principles” identified by the Electronic Banking Group (EBG) of the BCBS. Georgescu (2006) suggests that the competitive pressure to launch new innovative products in very short time scales intensifies the management challenge to ensure that adequate strategic assessment, risk analysis and security reviews are undertaken. Over the past two decades, e-banking has become an increasingly important area of interest, with the risks associated with e-banks during this period of significant growth requiring effective risk management processes. Based on the results of our research, the security risks are clearly identified as the most important as banks are working hard to mitigate the risks and this is very encouraging and effective.
 The main objectives are to investigate the risks of e-banking services in Oman, and their impact on population. Initially a semi-structured interview is conducted as a pilot study with four knowledgeable and experienced staff from one of the leading banks in Oman, to study employee views on risk management issues in e-banking. After the pilot study, the questionnaire was developed and used in major banks in Oman to determine whether it operates in line with basic risk management principles.

DEVELOPING A COMPREHENSIVE RISK ASSESSMENT MODEL BASED ON FUZZY BAYESIAN BELIEF NETWORK (FBBN)

Reliable and efficient risk assessments are essential to deal effectively with potential risks in international construction projects. However, most conventional risk modeling methods are based on the hypothesis that risk factors are independent, which does not account adequately for the causal relationships among risk factors. In this study, a risk assessment model for international construction projects was developed to improve the efficacy of risk management by integrating fault tree analysis and fuzzy set theory with a Bayesian belief network. The risk rating of each risk factor, expressed as the product of risk occurrence probability and impact, was incorporated into the risk assessment model to evaluate degrees of risk. Therefore, risk factors were categorized into different risk levels taking into account their inherent causal relationships, which allowed the identification of critical risk factors. The applicability of the fuzzy Bayesian belief network-based risk assessment model was verified using a case study through a comparative analysis with the results from a fuzzy synthetic evaluation method. The comparison shows that the proposed risk assessment model is able to provide guidelines for an effective risk management process and ultimately to increase project performance in a complex environment such as international construction projects.

Intelligent Risk Management framework

The Internet of Things(IoT) is rapidly increasing and enhancing today’s world by introducing a large set of interconnected devices. Several beneficial services are produced by these devices as for area monitoring and process control. However, IoT security is still a major problem. In fact, IoT’ security beggings largely whith an effective Risk Management process. However, the essense of this process is to acquire a risk inventory cibling the IoT devices. Nevertheless, it is quite difficult to obtaining this latter which significantly adds complication issues to the Risk Management.Without the ability of holisticly identify the IoT critical devices, inaccurate Risk Management is achieved which leads unfortunately to novel risk exposures. Traditional Risk-based approaches fails drastically at apprending IoT’ potential attacks. The dynamic structure, the heteregouns nature of devices, the various security objectives and infrastructure pervasiveness are key factors impacting the overall perfomance. Thus, a holistic Risk Management witihin the IoT is indispensable. Accordingly, we propose an intelligent Risk Management framework using Mobile Agents in order to deliver preventive and responsive assessment.

The Influence of Project Risk Management Maturity and Organizational Learning on the Success of Power Plant Construction Projects

Project risk management maturity measures how effective risk management processes are implemented by performing organizations aimed at meeting project objectives. Organizational learning from repetitive projects may assist performing organizations deliver successful projects. The purpose of this research is to measure the influence of project risk management maturity and organizational learning on the cost, time, and quality of a power plant construction project. In the studied projects, improving organizational learning led to enhancement of all success criteria, especially the cost and quality criteria. Success criteria trends have shown that the influence of organizational learning on improving project performance is more than the influence of the level of project risk management maturity.

РИЗИКИ В СИСТЕМІ ЕКОНОМІЧНОЇ БЕЗПЕКИ ПІДПРИЄМСТВА ТА ЗАСОБИ ЇХ НЕЙТРАЛІЗАЦІЇ

The activities of enterprises are characterized primarily by a certain level of economic freedom of economic entities. Regardless of their own will, the participants of economic relations during their activity are dealing with a certain level of uncertainty and, consequently, affect the types of risks inherent in the economy of the country as a whole, and directly in the industry in which the company operates. The level of economic security of an enterprise depends on how efficiently its management and managers will be able to avoid possible risks and eliminate the harmful effects of certain negative components of the internal and external environment. That is why it is necessary to identify in a timely manner the types of risks, to determine the sources of their occurrence, the scope of manifestation, to find ways to minimize the negative consequences in a timely manner. Each company needs an effective risk management system. The purpose of risk management is to maximize their positive impact while minimizing the associated negative factors. An effective detection and risk management process helps to achieve reasonable trade-offs between these dangers and new opportunities. Thus, smart risk management will lead to their neutralization. The purpose of the article is to study the risks and consider the aspects of building a risk management system at the enterprises. The article investigates the essence of the risks that affect the activities of the enterprise. The main effective directions of risk control are given. The methods of risk management used in the activities of enterprises are determined. The main stages of risk management at the strategic, tactical and operational levels of management are described. Characterized by the methodology Organization risk management. Integrated model , which was developed by the Commission of Treveda.

Systemic Control, Cultural Values and Religious Institutions An Assessment of Semi-Automatic Human Values Systems Analysis in Religious Institutional Diagnostics

Abstract Investigations of systems engineering failures from the aviation, nuclear and other sectors demonstrate the link between human factors and technical failures which may have lessons for other institutions. The term “safety culture” refers to background factors which impinge upon safety management systems, drawing particular attention to cultural features of organisations and these impinge upon effective control and risk management processes. Is it possible to formally or semi-formally analyse qualitative institutional cultural traits? This paper presents findings of a study in which automatic systems are used to provide an ethically-informed values analysis of a large values-driven institution. Tests showed that the system was capable of gathering, processing and presenting robust values congruency data capable of exposing deep axiological traits which may be out of alignment in a religious institution. Implications are drawn for control systems research, limitations are exposed and future research directions presented.

The Role of Risk Management and its Related Issues for Companies Economic Growth and Development of Insurance Sector: The Evidence of Georgia

This study provides information on the role of risk management in the insurance business. It presents different types of impacts that show us that every insurance company has to provide effective risk management process. Moreover, some major loss events in the history will be examined showing the possible outcomes. Research question of this paper is: “What is the role of risk management for companies economic growth and development for insurance sector?” H0- RM has an impact on economic growth and development of insurance sector To find the answer to research question we analyze all aspects of risk management. We provide information about Georgian insurance market and overview of companies. Also we analyze impact on fund capitalization and economic growth. International standards and requirement for risk management are analyzed. In particular, the paper encompasses The Solvency Directive: European regulations for insurance companies by three pillar approach. And also to answer the research question we did comparison between Azerbaijani, Armenian and Georgian insurance markets. Survey results show that, risk management, assessment and control is critical for organizations operations. It is important to define proper strategy and follow it in order to manage potential risks. Georgian market is developing and companies start to implement risk management function, however current level of managing risks is low.

A fuzzy multi-criteria decision-making approach for managing performance and risk in integrated procurement–production planning

Nowadays in Supply Chain (SC) networks, a high level of risk comes from SC partners. An effective risk management process becomes as a consequence mandatory, especially at the tactical planning level. The aim of this article is to present a risk-oriented integrated procurement–production approach for tactical planning in a multi-echelon SC network involving multiple suppliers, multiple parallel manufacturing plants, multiple subcontractors and several customers. An originality of the work is to combine an analytical model allowing to build feasible scenarios and a multi-criteria approach for assessing these scenarios. The literature has mainly addressed the problem through cost or profit-based optimisation and seldom considers more qualitative yet important criteria linked to risk, like trust in the supplier, flexibility or resilience. Unlike the traditional approaches, we present a method evaluating each possible supply scenario through performance-based and risk-based decision criteria, involving both qualitative and quantitative factors, in order to clearly separate the performance of a scenario and the risk taken if it is adopted. Since the decision-maker often cannot provide crisp values for some critical data, fuzzy sets theory is suggested in order to model vague information based on subjective expertise. Fuzzy Technique for Order of Preference by Similarity to Ideal Solution is used to determine both the performance and risk measures correlated to each possible tactical plan. The applicability and tractability of the proposed approach is shown on an illustrative example and a sensitivity analysis is performed to investigate the influence of criteria weights on the selection of the procurement–production plan.

Risk management and managerial mindset

PurposeThis paper aims to determine why so many banks do not recognize in a timely manner the inherent risks and imbalances with their risk/reward decision trade-offs, to elevate the risk conversation by embracing a more strategic and adaptive behavioral perspective and to show how an effective risk management organizational mindset is a definite solution for mitigating risk.Design/methodology/approachA direct-mail questionnaire survey was designed with the unit of analysis US community bank (under US$1.5bn in assets) and its risk performance. We used quantitative methods using previously tested scales for main constructs and FDIC bank data for performance measures. To gauge the models capacity for determining discriminatory value, results were also measured against relative peer financial performance.FindingsThe findings established that an effective risk management process that assimilates risk tolerance, risk propensity and risk practices into a managerial mindset offers a sound solution for mitigating risk. By envisioning risk as a “conceptual model of thinking” and interpreting it as a “predictable business process”, and by offering specific “decision enablers” that complement the corporate mindset, it creates a safety net against unsafe risk practices. As a result, it allows for an appreciation that current financial performance is a direct measure of management’s risk decision capabilities.Research limitations/implicationsThe sample size (n = 151), although adequate for our purpose was relatively small, was restricted to US community banks (less than US$1.5bn in assets) and single-informants (CEOs), thereby providing a somewhat narrow focus. Also, the survey was conducted during a slow economic period, and results may be different during a growth period. We see ripe opportunity for further research, especially related to money-center and regional banks and the next level of management as well as the behavioral influences that frame the risk/reward opportunity. Research on other industries, small businesses, etc., would be valuable because risk permeates all decisioning.Practical implicationsFrom a practitioner perspective, providing guidance on risk oversight allows for improved financial performance. The findings should be of interest to financial industry leaders, policy makers and regulators as understanding how an active orientation of risk tolerance, risk propensity and risk practices are coordinated across the organization is vital. Also, managers need to understand how characteristics of risk management manifest itself within their organization in terms of productivity and financial performance.Originality/valueThis paper is the first comprehensive empirical study that incorporates a conceptual approach that uses outcome history, behavioral influences and operational dimensions to identify risk management capabilities in community banks designed to increase risk/reward awareness.

Interest Rate Risk Management of Commercial Banks in Bangladesh Based on IS (Interest Sensitivity) GAP Analysis

This paper on the interest rate risk management of a bank will provide a detailed picture of risk management of bank because it is one of the concerned factors for every bank. This study will also indicate any shortfall of bank in terms of interest rate risk management and offer suitable recommendations. Interest rate risk is the exposure of a bank's financial condition to adverse movements in interest rates. Accepting this risk is a normal part of banking and can be an important source of profitability and shareholder value. However, excessive interest rate risk can pose a significant threat to a bank's earnings and capital base. Changes in interest rates affect a bank's earnings by changing its net interest income and the level of other interest sensitive income and operating expenses. Changes in interest rates also affect the underlying value of the bank's assets, liabilities, and off-balance-sheet (OBS) instruments because the present value of future cash flows (and in some cases, the cash flows themselves) change when interest rates change. Accordingly, an effective risk management process that maintains interest rate risk within prudent levels is essential to the safety and soundness of banks.