Enterprise Risk Management Approach Research Articles

Risk Management and Service Management Strategies for Car Rental in Improving Vehicle Security Quality for the Company

The shift in tourist interest from initially using transportation services through travel agents to now preferring to rent vehicles themselves has become evident. With the increasing number of consumers requiring car rental services and companies expanding their fleet sizes, it is undeniable that the associated risks also increase each year. Therefore, the purpose of this research is to explore the complex risks to vehicle units in car rental companies in Bali and to determine strategies and steps to improve the security quality of vehicle units in these companies. This study employs a descriptive qualitative method with an enterprise risk management approach, which includes risk identification, risk analysis, risk assessment, risk management, and risk monitoring. The research results, using the likelihood impact matrix technique on five car rental companies in Bali, identified four common risks: operational risk, financial risk, human resources risk, and external risk, with varying levels of risk from low risk, medium risk, to high risk. Strategies for managing these risks include mitigating medium risks and accepting low risks. The policies derived from this study are in the form of risk analysis and risk management strategies for car rental companies in Bali to enhance the security quality of their vehicle units.

The Role of Risk Management in Competitiveness at PT Bank Central Asia TBK with an ERM (Enterprise Risk Management) Approach using Likelihood Table

The key to BCA's success has survived to this day. Because BCA is able to seize opportunities for bank development that arise from time to time and turn them into competitive advantages. The purpose of this study is to determine the role of risk management in competitiveness at PT Bank Central Asia Tbk. with an ERM (Enterprise Risk Management) approach using a likelihood table so that it can easily handle risks that occur in the future, and the integrity of BCA can be maintained consistently in banking world’s the research method is a survey through structured interviews with questionnaires. Observation data collection techniques, interviews and document studies. The sample in this study is the entire population of 26 people. Data analysis techniques with Fishbone and heatmap. The results showed that there were 21 KTD risk categories with a risk score of 5.03 to 10.92. With the implementation of Operational risk management, BCA has become stronger at the level of competition in the banking world.

İşletmelerde Yazılım Lisanslarının Yönetiminde Risklerin İncelenmesi ve Fayda-Maliyet Analizi

In this study, a proposal on how software license assets should be managed with an enterprise risk management approach has been put forward. The study examined licenses, which mean software usage rights, and various license models with a complex structure. Within the scope of the study, the risks that might arise concerning software licenses were determined and these risks were categorized. Considerable risks prioritized by senior management in businesses were identified and responses and strategies were set out for each risk factor that needs to be kept under control. The method suggested in the study was applied in a large-scale enterprise acting in the telecommunications sector. As part of this application, the enterprise’s current situation in software asset management was revealed. The outcomes of the application are expected to be beneficial in determining the risk models of the enterprises. The study presents the study's management of software assets, determination of risks, and solutions to be applied to risks.

Building proactive organizational resilience against the risk of major process safety incidents

AbstractMajor process safety incidents remain a key challenge to all industries involved in the handling, processing, manufacturing and transport of hazardous materials, including hydrocarbons. Over the past decade, there have been a number of incidents that have led to significant changes in the manner in which major industrial incidents are perceived and managed. Many companies adopt a traditional risk‐based approach when managing hazards. Larger organizations, such as oil and gas and petrochemical companies, can benefit from a proactive enterprise risk management (ERM) approach to build organizational resilience against potential threats to the business. While general risk management practices are focused on facility/asset level risks, the ERM approach offers a broader perspective when evaluating risks faced by businesses. The approach is flexible, dynamic, and cyclic in nature and provides a structured solution to the constantly evolving business risk environment. The results are intended to provide company executives with “a boardroom preview” of the risks faced and managed by the organization. This paper highlights the practical application of a six‐step ERM framework when assessing, analyzing, and recommending mitigation measures to bridge gaps related to managing major process safety risks. In addition, a structured methodology for the development and utilization of key risk indicators intended for continuous monitoring of process safety risks at a corporate level will be shared. Lessons learned from conducting this exercise will be discussed with practical advice on how to overcome commonly faced barriers.

RISK MAPPING ON LENDING METHOD OF SHARIA MICRO FINANCING INSTITUTION (INDONESIA EVIDENCE)

The purposes of financing method are to maintain the smoothness of financial return and to mitigate the risk of default, especially for microfinance institutions. It is similar to the 5Cs in banking. However, Islamic microfinance institutions have quite striking differences in practice. This research aimed to analyze the risk management of financing method on Sharia Micro Financing Institutions (SMFIs) in Indonesia with ERM (Enterprise Risk Management) approach classifying the risks become 4 part; strategic risks, operations risks, reporting risks, and compliance risks. The research method was a qualitative descriptive study by breaking down risk events into 2 categories, namely the financing process and the financing actors. The financing process was divided into 3 stages, namely pre-processing, processing, and post-processing. While, the financing actors were debtors, creditors, and funding source institutions.
 The data collection methods were observation, in-depth interview, and library research. This research identified 64 risk events. The risk that most often faced by financing actors was the one inherent in the debtor. While, the risk that mostly faced by creditors was during the pre-financing process. The highest undesirable risks were debtor’s misunderstanding of sharia and interest-based contracts, misassessment of the company propriety, and difficulty in insurance claims.

A Study on Blockchain Technology as a Dominant Feature to Mitigate Reputational Risk for Indian Academic Institutions and Universities

The paper-based certification is prone to manipulation and vulnerable to fraud. Instances of fraudulent degrees, manipulation of academic records, or compromised academic programs adversely impact and damage an academic institution's credibility. It also affects the Indian universities’ mission and prospects of the students graduating from such a university. What makes reputational risk a unique risk is that it may arise both from the university or institution's failure or the action outside the university. It is, therefore, essential to take an enterprise risk management approach to mitigate reputational risk. Robust credential verification and validation protocols are the most important protections against fake certifications. The legacy certificate verification solutions are highly centralized, i.e., utterly dependent on the issuing authority for certificates. Despite the University Grants Commission (UGC) taking strict measures against individuals, Indian universities, colleges, and associations, we do come across several acts of torts. Some of the technology-savvy institutions have moved to digital certificates and digital signatures. However, this has an inherent weakness, i.e., they still need to rely on a trusted third party. Blockchain technology has three foundational components, data structures based on cryptography that make it secure and tamperproof, consensus protocols that allow it to function truthfully and without any central authority or a third party smart contracts, which provide efficiency and business value transactions. These key features of blockchain, if implemented appropriately, effectively has the potential to mitigate the inherent reputational risk arising from fraudulent academic certificate matters. Niti Ayog is currently developing a blockchain-based proof of concepts to solve traditional educational qualifications related to identity misrepresentation and document forgery. The immutability attribute of the blockchain ensures that tampering and manipulation of the record are not attainable. This paper focuses on the reputational risk Indian universities and institution may face when its certifications are not easily verifiable. Therefore, it becomes easy targets for bad actors to exploit vulnerabilities by issuing counterfeit certificates. Secondary published data, including various scholarly journals, reports, industry publications, and website sources, are utilized to develop this case study. The paper also explores how blockchain technology with specific reference to the proof of concept SuperCert proposed by Niti Ayog for Indian academic institutions may provide effective preventive control to overcome such reputational risk using the ABCD analysis framework as a research case study.

Learning from others: A low-cost-high-impact risk/opportunity identification technique.

News for risk/opportunity identification (NfROI) is a tool for practitioners to leverage the journey from a risk management mindset to an enterprise risk management approach. NfROI unleashes the power of storytelling and provides a standardized format to enhance the existing practice of gleaning information from sources such as JHRM, news outlets, social media, and the ASHRM Exchange. A series of 3 examples highlight the advantages of learning from others as a complement to retrospective internal data. The stories have implications across the ASHRM's ERM Framework domains and thereby provide bridges across the pillars in the organizational chart. Learning from others can reduce costs and reveal emerging risks before the direct impact on the organization.

A Sustainable Industrial Development Approach: Enterprice Risk Management in View

The need to improve upon organizational performance and operational effectiveness call for sustainable industrial development and Risk management initiatives to deliver new corporate business models. An organizations interest to integrate and implement strategic approaches to identify, access and prepare against uncertainties through its business activities hold more benefits as per increased productivity. The authors’ investigation via an in-depth interview comprising of the senior and mid-level management staff of a steel-product manufacturing company in Nigeria subscribes to a single case study. We explore the implementation challenges of Enterprise Risk Management (ERM) in the supply chain of manufacturing firms. The research infers the case firm; having implemented and succefully demonstrated the ISO90001 and ISO13000 (quality and environmental standard), struggles to register any benefits with the ERM-ISO31000 operative. The findings further point at the managerial disconnect to effectively communicate the objective and the changing cultural practice. Also, notable was the worker’s perception of lacking the necessary information communication assistance to influence the ERM execution. The investigation contributes to the case firm understading of ERM and successful approach towards its implementation.

Enterprise risk management and economies of scale and scope: evidence from the German insurance industry

Enterprise risk management (ERM) is the approach of managing all risks faced by an enterprise in an integrated, holistic fashion. This research investigates whether the utilization of the ERM approach helps firms achieve economies of scale and scope. We use detailed survey data of German property-liability insurance companies that allows us to construct continuous measures of ERM quality. We find that ERM quality positively moderates the size-scale efficiency relationship, and we find that ERM positively moderates the diversification-revenue scope efficiency relationship, indicating that ERM facilitates economies of scale and economies of scope with respect to revenue complementarities. We do not find any evidence of economies of scope with respect to cost complementarities. Our results suggest that ERM’s impact on economies of scale and scope is one answer to the question of how ERM can create value.

Enterprise risk management and bow ties: going beyond patient safety

Purpose The growing importance of risk management programmes and practices in different industries has given rise to a new risk management approach, i.e. enterprise risk management. The purpose of this paper is to better understand the necessity, benefit, approaches and methodologies of managing risks in healthcare. It compares and contrasts between the traditional and enterprise risk management approaches within the healthcare context. In addition, it introduces bow tie methodology, a prospective risk assessment tool proposed by the American Society for Healthcare Risk Management as a visual risk management tool used in enterprise risk management. Design/methodology/approach This is a critical review of published literature on the topics of governance, patient safety, risk management, enterprise risk management and bow tie, which aims to draw a link between them and find the benefits behind their adoption. Findings Enterprise risk management is a generic holistic approach that extends the benefits of risk management programme beyond the traditional insurable hazards and/or losses. In addition, the bow tie methodology is a barrier-based risk analysis and management tool used in enterprise risk management for critical events related to the relevant day-to-day operations. It is a visual risk assessment tool which is used in many higher reliability industries. Nevertheless, enterprise risk management and bow ties are reported with limited use in healthcare. Originality/value The paper suggests the applicability and usefulness of enterprise risk management to healthcare, and proposes the bow tie methodology as a proactive barrier-based risk management tool valid for enterprise risk management implementation in healthcare.

Enterprise risk management in integrated crop-livestock systems: a method proposition

AbstractIntegrated crop-livestock systems (ICLS) are currently promoted agricultural production systems that aim to use better resources through production integration and intensification. While this system reduces some risks, it adds complexity and new risks to businesses due to interdependence between the agricultural modules. To deal with these issues, integrated risk management is required to reduce the effects of risks and to take advantage of the opportunities of an ICLS. Generically, enterprise risk management (ERM) meets this need by proposing comprehensive and coherent risk management, instead of managing agricultural module risks individually. However, there is a need to customize the ERM approach to ICLS. Therefore, the current study aims to develop a method to manage risks for ICLS based on ERM, integrating the management of risks and aligning risk management with the strategic objectives. A literature review, a pilot study, interviews with experts, four case studies and 20 practitioners supported the method development and evaluation through three versions. As a result, the method identifies and relates risks through process mapping with a qualitative and quantitative analysis of their impacts, determines risk responses based on willingness to take risks, and helps identify processes to control, communicate and monitor the risks. The method also stimulates the implementation of ICLS in market-oriented farms, providing an approach to increase the chances of ICLS success. The main difference from previous research lies in the integrative management of multiple risks, the alignment of risks with strategy and the consideration that a risk might be considered an opportunity.

Enterprise Risk Management and Firm Value: Evidence from Brazil

ABSTRACTInternational studies have shown that the evolution of traditional risk management (TRM) toward a holistic perspective and the simple adoption of enterprise risk management (ERM) have increased firm value from a strategic perspective. This study empirically investigates the association between ERM and firm value (measured by Tobin’s q ratio) in 649 firm-year observations that were listed in the IBrX100 index on the Brazilian stock exchange (BM&FBovespa) during 2004–2013. After the introduction of controls with exogenous effects, the results indicate a positive association between firm value and the use of an ERM approach, which aligns with most international studies.

Embrace enterprise risk management approach to add value, keep up with changing times

Judging by the new and emerging risks throughout higher education, risk management has become a more pressing issue than ever before. That's according to Jean Demchak, managing director and global education leader at Marsh LLC, a risk management firm; and Luke Figora, assistant vice president of the Office of Risk Management at Northwestern University and president‐elect of the University Risk Management and Insurance Association. They spoke at Stetson University's National Conference on Law and Higher Education.

Emerging IT Risks: Insights from German Banking

How do German banks manage the emerging risks stemming from IT innovations such as cyber risk? With a focus on process, roles and responsibilities, field data from ten banks participating in the 2014 ECB stress test were collected by interviewing IT managers, risk managers and external experts. Current procedures for handling emerging risks in German banks were identified from the interviews and analysed, guided by the extant literature. A clear gap was found between enterprise risk management (ERM) as a general approach to risks threatening firms’ objectives and ERM’s neglect of emerging risks, such as those associated with IT innovations. The findings suggest that ERM should be extended towards the collection and sharing of knowledge to allow for an initial understanding and description of emerging risks, as opposed to the traditional ERM approach involving estimates of impact and probability. For example, as cyber risks emerge from an IT innovation, the focus may need to switch towards reducing uncertainty through knowledge acquisition. Since individual managers seldom possess all relevant knowledge of an IT innovation, various stakeholders may need to be involved to exploit their expertise.

Enterprise Risk Management and Economies of Scale and Scope: Evidence from the German Insurance Industry

Enterprise risk management (ERM) is the approach of managing all risks faced by an enterprise in an integrated, holistic fashion. This research investigates whether the utilization of the ERM approach helps firms achieve economies of scale and scope. We use detailed survey data of German property-liability insurance companies that allows us to construct continuous measures of ERM quality. We find that ERM quality positively moderates the size-scale efficiency relationship, and we find that ERM positively moderates the diversification-revenue scope efficiency relationship, indicating that ERM facilitates economies of scale and economies of scope with respect to revenue complementarities. We do not find any evidence of economies of scope with respect to cost complementarities. Our results suggest that ERM’s impact on economies of scale and scope is one answer to the question how ERM can create value.

Enterprise Risk Management: Factors Associated with Effective Implementation

Risk management is undergoing a great change, as organizations shift from the traditional and compartmental to an enterprise wide approach. Consequently, enterprise risk management (ERM) is gaining global attention among risk management professionals and academics. The demand for the adoption of ERM has led to several companies embracing it, yet its implementation has become challenging. Research shows that ERM approach emphasizes a holistic approach for assessing and evaluating the risks that an organization faces as against the “silo” approach of the traditional methods. The extant literature shows that through the reduction of the risk that an organization faces, ERM is capable of improving the performance and value. The study used a non-experimental correlational approach to explore the relationship between the presence of a chief risk officer (CRO) and an audit committee (AC), and the support of top management (TM) in relation to the implementation of ERM. A survey instrument was provided to self-identified risk-management professionals who are members of Survey Monkey Audience Service database. The target sample frame requested for analysis using a power of .95 was (n = 119). However, the final number analyzed was (n = 134). Frequencies and percentages were conducted on the demographic survey items and regression and correlational analyses were also performed. The study findings show that there was a significant relationship between the role of a CRO, the presence of an AC, and the support of TM and the level of ERM deployment. The study also found significant correlations between management support level and CRO, and AC. In addition, a much strong positive correlation was noted between the presence of a CRO and an AC.

Enterprise risk management: Factors associated with effective implementation

Risk management is undergoing a great change, as organizations shift from the traditional and compartmental to an enterprise wide approach. Consequently, enterprise risk management (ERM) is gaining global attention among risk management professionals and academics. The demand for the adoption of ERM has led to several companies embracing it, yet its implementation has become challenging. Research shows that ERM approach emphasizes a holistic approach for assessing and evaluating the risks that an organization faces as against the “silo” approach of the traditional methods. The extant literature shows that through the reduction of the risk that an organization faces, ERM is capable of improving the performance and value. The study used a non-experimental correlational approach to explore the relationship between the presence of a chief risk officer (CRO) and an audit committee (AC), and the support of top management (TM) in relation to the implementation of ERM. A survey instrument was provided to self-identified risk-management professionals who are members of Survey Monkey Audience Service database. The target sample frame requested for analysis using a power of .95 was (n = 119). However, the final number analyzed was (n = 134). Frequencies and percentages were conducted on the demographic survey items and regression and correlational analyses were also performed. The study findings show that there was a significant relationship between the role of a CRO, the presence of an AC, and the support of TM and the level of ERM deployment. The study also found significant correlations between management support level and CRO, and AC. In addition, a much strong positive correlation was noted between the presence of a CRO and an AC.

Risk Governance and Performance of the Italian Banks: An Empirical Analysis

The paper investigates the relation between the adoption of good practices in risk management and the level of performance and riskiness of banks. In particular, we aim at understanding if the application of the Enterprise Risk Management approach to banks helps increasing their stability. We test the hypothesis that those banks using an integrated risk management approach have, ceteris paribus, a lower level of risk and a higher performance. Our analysis focuses on 21 Italian listed banking groups, in the time period 2005-2013. Our preliminary results show that the risk management function influences the risk and performance of the bank; however, it is not possible from our data to define an optimal model of risk governance.

Enterprise Risk Management and the Cost of Capital

Enterprise Risk Management (ERM) is a process that manages all risks in an integrated, holistic fashion by controlling and coordinating any offsetting risks across the enterprise. This research investigates whether the adoption of the ERM approach affects firms’ cost of equity capital. We restrict our analysis to the U.S. insurance industry to control for unobservable differences in business models and risk exposures across industries. We simultaneously model firms’ adoption of ERM and the effect of ERM on the cost of capital. We find that ERM adoption significantly reduces firm’s cost of capital. Our results suggest that cost of capital benefits are one answer to the question how ERM can create value.

Enterprise risk management in SMEs: Towards a structural model

This article analyses enterprise risk management (ERM) in small and medium-sized enterprises (SMEs) by developing a structural model based on a survey questionnaire. Preconditions for ERM implementation, applied ERM approaches and their effects on strategic orientation are derived. The results suggest that SMEs follow either an active or a passive ERM approach, which affects their strategic orientation; a passive approach results in a defensive strategy and an active approach, an offensive strategy. Firm size, sector affiliation and ownership structure influence the implementation of ERM. The applied conceptualization of ERM may help SMEs adjust to a changing environment to gain strategic advantage thus, increasing competitiveness and business success.