Concept Of Enterprise Risk Management Research Articles

Measuring the impact of enterprise risk management on performance, value, and risk indicators of Borsa Istanbul XBANK companies with data mining prediction models

Risk management (RM) is viewed by organizations from a holistic perspective instead of a silo-based point of view and a change in basic assumptions has occurred in recent years. The comprehensive approach to RM that is developed based on a holistic perspective and is adopted by companies is called enterprise risk management (ERM). From the general point of view, it is expected that companies will have sustainable operations, improved performance and value, and controlled risks by using the ERM concept. In this article, the relations of ERM adaptation with firm performance, firm value, and risks were researched through ordinal variables such as the implementation level of ERM and the sophistication level of the organizational structure of ERM in regression models based on panel data (PD). Empirical evidence depending on a sample of ten banking companies listed on the Borsa Istanbul (BIST) Banks index (XBANK) for the period from 2019 to 2022 confirms the above basic argument for firm performance, firm value, and the insolvency risk of banks in general terms. In addition, the prediction accuracy of PD models is calculated for the performance, value, and risk indicators of banks, and the partial least squares regression model is proposed as the alternative prediction model of data mining.

СОВРЕМЕННЫЕ ЗАРУБЕЖНЫЕ НАПРАВЛЕНИЯ ИССЛЕДОВАНИЙ В ОБЛАСТИ УПРАВЛЕНИЯ РИСКАМИ ПРЕДПРИЯТИЙ

The article presents the results of an analysis of modern foreign scientific sources on enterprise risk management. Based on bibliographic analysis, it is shown that in setting research goals and in practical activities in risk management, there has been a paradigm shift and a change in approaches to ways to solve this problem. The main trend is an increase in research and practical developments based on an integrated approach to identifying and analyzing risks, as well as building an enterprise risk management system. There has also been increased interest in studying the relationship between enterprise performance and the practice of using a corporate risk management system. During the research, key directions in the development of the concept of enterprise risk management were highlighted, and shortcomings and gaps in existing research were revealed. It was revealed that the ambiguity in the interpretation of risks, as well as the influence of an integrated enterprise risk management system and its impact on key performance indicators of enterprises (efficiency, market value, competitiveness) in the scientific and empirical literature has led to a significant expansion of areas of research within the framework of solving the problem of risk management.

Emerging Roles and Responsibilities of Auditors and CFOs in the Light of Transforming Risk Landscape

A new perspective of risk management in the context of emergence of new technologies and innovations has not only changed the risk landscape in the last few years but has also prompted an important shift in the role of auditors and Chief Financial Officers (CFOs) in organizations. Auditors along with senior management need to take a holistic and forward trending view on the emerging risk and risk management practices. They need to be transparent about arriving at the audit opinion and expand their coverage in implementing and improving compliance, governance and risk management-related processes and controls within an organization. New ways and perspectives of risk management have emerged and board, senior leaders, regulators, leaders have all expanded their focus to include the concept of enterprise risk management (ERM). The realities of an ever-changing world with frequent business disruptions have made the concept of ERM important in companies. With the changing times and dynamic scenario that has arisen due to the pandemic, leading organizations are increasingly expecting auditors and CFOs to ensure that they integrate risk into strategic decision-making so as to make smarter decisions. Auditors need to move away from a siloed approach to a more consolidated risk assessment and monitoring perspective. They need to add focus to the top risk areas, think about the return for the organization, avoid unnecessary governance and compliance, and provide objective assurance to the board regarding risk management efficiency.

The Impact of Enterprise Risk Management and Sustainability Reporting on Business Performance of Listed Enterprises on Vietnam Stock Market

Enterprise Risk Management (ERM) is becoming a critical issue in the current dynamic environment where organizations have been exposed to more risks from different perspectives. Additionally, Sustainability Reporting also emerges as one of the burning topics in recent management literature. This paper examines whether ERM implementation and Sustainability Reporting could bring any effect on the business performance of Vietnamese listed companies. The paper constructs the index to measure the level of ERM implementation of listed firms in Vietnam and uses the generalized least square method (GLS) to analyze the impact of these two concerns on business performance. The regression results indicate that there are significant positive relationships between ERM as well as Sustainability Reporting and the business performance of listed companies on the Vietnam stock exchange over the period 2016-2019. The result strengthens the previous studies that companies with more sustainability disclosure and more efficient ERM implementation are likely to be better in terms of financial performance and market performance. Moreover, there is growing support for the argument that companies will improve their performance by employing the ERM concept and enhancing sustainability transparency to stakeholders.

The Impact of Enterprise Risk Management and Sustainability Reporting on Business Performance of Listed Enterprises on Vietnam Stock Market

Enterprise Risk Management (ERM) is becoming a critical issue in the current dynamic environment where organizations have been exposed to more risks from different perspectives. Additionally, Sustainability Reporting also emerges as one of the burning topics in recent management literature. This paper examines whether ERM implementation and Sustainability Reporting could bring any effect on the business performance of Vietnamese listed companies. The paper constructs the index to measure the level of ERM implementation of listed firms in Vietnam and uses the generalized least square method (GLS) to analyze the impact of these two concerns on business performance. The regression results indicate that there are significant positive relationships between ERM as well as Sustainability Reporting and the business performance of listed companies on the Vietnam stock exchange over the period 2016-2019. The result strengthens the previous studies that companies with more sustainability disclosure and more efficient ERM implementation are likely to be better in terms of financial performance and market performance. Moreover, there is growing support for the argument that companies will improve their performance by employing the ERM concept and enhancing sustainability transparency to stakeholders.

Rethinking the implementation of enterprise risk management (ERM) as a socio-technical challenge

ERM is currently the risk management approach intended to render an organization more anticipatory and effective in evaluating, embracing, and managing the myriad risks that it may face. Accordingly, ERM has been embraced by a number of large and medium-sized organizations worldwide. However, many of those companies, while they still believe in the concept of ERM, are frustrated by implementation issues that have impeded the expected benefits of ERM.Therefore, this paper develops a theoretical framework that identifies social factors - factors peculiar to organizational structure and roles, human behavior and quality of working within the organization - and technical factors - factors peculiar to the organizational work system which includes technology, policies, rules procedures and related knowledge among other aspects - that are critical to achieving successful ERM implementation from the perspective of ERM as a complex process innovation. More specifically, this research addresses a significant question: What factors are critical to achieving successful ERM implementation? Given the significant disparity between the adoption and actual implementation and use of ERM, this is an important question. Our conceptualization of ERM implementation draws on three theoretical perspectives: the sociotechnical, the mutual adaptation and the dynamic capability perspective to frame our theoretical foundation. Yet, theories of process-based innovation suggest that an array factors combine together in influencing the extent to which complex business processes such as Enterprise risk management are successfully implemented. Our study casts light on the role of particular socio-technical factors that influence the successful implementation of ERM, extends our understanding of ERM beyond its current narrow financial view, and relates ERM implementation more closely to the challenges of management practice.

ШАХРАЙСТВА У ВІТЧИЗНЯНИХ КОМПАНІЯХ: ВИДИ, ФАКТОРИ ВИНИКНЕННЯ, ПРОФЕСІЙНІ СХЕМИ ТА ЗАХОДИ БОРОТЬБИ

In the article the author considers the actual issues of fraud in domestic companies of various sectors of the national economy. The purpose of this study is identification and subsequent analysis of the factors, sources, methods and means of implementing fraudulent schemes at domestic enterprises, taking into account foreign experience; developing mechanisms for counteracting fraud-risks taking into account the specifics of activities. The data of international organizations on the issues of fraud, its factors, sources, and the most widespread professional schemes in the countries of Eastern Europe and Western / Central Asia are analyzed. In the course of the research, the unsystematic and non-controllable process of risk management at enterprises was identified, which could, if effective risk management is as low as possible or completely leveled, which in future generates fraud risks. According to the ACFE study, an interesting example of European anti-fraud experience is the availability of a hotline, which almost 2 times increases the effectiveness of detecting fraudulent schemes through unofficial sources of information. The author proposes the inclusion of fraud-risk management issues in the Concept of Enterprise Risk Management as the main document regulating risk management in the company. The most common causes of fraud in domestic companies are the unconscientiousness of employees and unwarranted costs. Particular attention deserves a discrepancy between real practice and perceived effectiveness, namely: more active use of the annual audit of financial statements and the involvement of the owner in operational management as a means of fighting fraud. Based on the study of mechanisms for counteracting fraud in domestic companies with experience of fixing fraud in the past, an annual examination is proposed, taking into account the specifics of the functioning of domestic companies.

Implementation of the ERM concept in Serbia: Comparative analysis: Real sector and financial sector

The paper analyzes the level of development regarding risk management, with a special focus on ERM (Enterprise Risk Management) implementation in the Serbian companies. The aim is to raise the awareness regarding the successful risk management implementation in the companies in Serbia, using the bank sector as the benchmark and the example of good practice. The research was conveyed in 2015 and it confirmed the general trend that the companies in Serbia were more inclined to use traditional methods regarding risk management, that the ownership structure influenced the level of ERM awareness in the companies and finally that the Serbian companies lacked the supporting organizational structures and adequate systems of internal controls which would contribute to the successful ERM implementation.

A model for operationalizing ERM in project-based operations through dynamic capabilities

Purpose– This paper aims to propose a model, to operationalize the idea of enterprise risk management (ERM), relying on the concept of capabilities. The proposed model, labelled “Spring model”, is specifically tailored to the characteristics of project-based organisations, where risk is to be managed transversally to different organizational levels (enterprise, project portfolio, functions, projects).Design/methodology/approach– A case study methodology is used to exemplify the functioning of the proposed model and display the suitability of the concept of capabilities, as means whereby companies can manage their risk. Data were collected from different sources over a time frame of three years: semi-structured interviews, official documents and presentations, archives, direct observation and internal document usually not available to the public.Findings– The “Spring model” explains how risk can impact different organizational levels (enterprise, project portfolio, functions, projects), and how risk can be effectively managed, at different organizational levels, through the organization's capabilities.Practical implications– The paper gives concrete guidance on the operational elements that project-based organisations should consider for managing risks in a comprehensive and integrated way and discusses potential analysis/insights that could be derived embracing the capability perspective. The empirical testing, performed in a leading oil and gas company, provides an example of its functioning.Originality/value– The paper represents an attempt to apply ERM concepts and tools to operations, making a connection between research in corporate governance and finance, where the ERM concept originated, and research in project management, where attention of researchers tended to concentrate on specific types of risk management practices.

Bruk av investeringsanalysemetoder og avkastningskrav – Norge anno 2012

There is a never-ending debate about practice relevance within management accounting and control research. This dissertation contributes to an understanding of the gap claimed between theory and practice. The concepts of theory and practice are discussed, and the key finding is that there is no unanimous definition of the concepts, something which may contribute to confusion about the content of the gap. Moreover, in addition to having multiple meanings, the concepts are often applied implicitly. In this dissertation, the concepts are considered according to the following: (1) theory as ideas and hypotheses which explain something, and (2) practice as a translation of these ideas into action. The gap is a discrepancy between the ideas and how these ideas are executed. There is an underlying assumption that this gap matters only if theories in some way do not have an impact on managerial decisions. The papers describe certain situations where this gap is present and relevant. Based on a multiple case study, Paper 1 investigates the ideals of risk reporting in light of the concept of enterprise risk management, a concept that is introduced by consultants and promoted by governing bodies. The main finding is that the ideals of enterprise risk management are not implemented in practice. The topic of Paper 2 is the use of investment analysis techniques and choice of cost of capital. The survey shows that net present value and weighted average cost of capital have the most widespread use. The paper discusses possible causes and consequences of the gap between theory and practice among these well-established methods. The purpose of Paper 3 is to study whether the introductory budgeting textbooks have changed over the past 20 years, as expected based on criticism from both academics and practitioners. This bibliographic study of an important bridge between theory and practice finds only minor traces of the critique being incorporated in new editions of textbooks. Paper 4 addresses the question of how cost-based pricing can be performed in the presence of uncertainty and risk. The paper exemplifies one possible strategy for determining internal and external prices in order to reduce the risk of losses that arise from under-allocation of costs. In contrast to the other three papers, this one is normative. In addition, the introduction presents a normative framework which can be applied by researchers to precis in their communication with businesses the purposes for which certain objects are studied. Practitioners can apply the framework when configuring their control package. The introduction closes with specific implications of the dissertation for researchers, lecturers and practitioners, three target groups with different perspectives on management accounting and control. All over the present work also contribute to management accounting and control research by applying mixed-methods and thus crossing paradigms something which is rarely observed in the literature.

Risk reporting to the board of directors: comparison of Norwegian power companies and banks

This paper considers the function of risk reporting to the board of directors among a sample of Norwegian power companies and banks. The concept of enterprise risk management is being promoted by legislators and is an emerging topic among practitioners and in the academic literature. There exist few studies of what businesses actually do, and this paper sheds light on existing practice and acts as a point of departure for further surveys. It compares two industries where legislative requirements differ, but it finds the same pattern: the ideals of enterprise risk management are not being implemented in practice.

An Examination of Enterprise Risk Management (ERM) Practices among the Government-Linked Companies (GLCs) in Malaysia

Enterprise Risk Management (ERM) is a new concept of managing risks holistically and in Malaysia, such a concept is still relatively new among Malaysian companies. On a positive note however, the ERM concept appear to be receiving much attention over the recent years from various businesses and industries in Malaysia. This particular study aims to determine the level of ERM adoption among the Government-Linked Companies (GLCs) and to examine the influence of Chief Risk Officers (CROs) and Board of Directors (BODSs) on the ERM implementation itself. Findings of the study showed that the more established GLCs were more receptive to the adoption of ERM as compared to the less established ones. Also, companies that adopt ERM were found to have appointed the Chief Risk Officers (CROs). In addition, the quality of Board of Directors (BODSs) was also found to play a significant role in respect of ERM implementation.

The Dynamic Interactions between Risk Management, Capital Management, and Financial Management in the U.S. Property/Liability Insurance Industry

This study examines empirically how risk management, financial management, and capital management are related to each other in the property/liability insurance industry, thereby reflecting interactions in managerial decisions such as the choice of derivatives and reinsurance use, the allocation of asset risks, the determination of underwriting activities and liability risks, and the adequacy of capital levels. This research contributes to the literature by adopting structural equation modeling to capture not only the dynamic interactions among capital management, financial management, and risk management, but also the effects of internal integrated factors or external regulatory factors on these managerial decisions. Among the empirical findings of this study, it is shown that risk management, capital management and financial management should be assessed under an integrated framework as emphasized in the concept of enterprise risk management. In addition, regulatory requirements embedded in the insurance industry might play an essential role in the integration of managerial decisions.

Enterprise risk management and firm performance: A contingency perspective

In recent years, a paradigm shift has occurred regarding the way organizations view risk management. Instead of looking at risk management from a silo-based perspective, the trend is to take a holistic view of risk management. This holistic approach toward managing an organization’s risk is commonly referred to as enterprise risk management (ERM). Indeed, there is growing support for the general argument that organizations will improve their performance by employing the ERM concept. The basic argument presented in this paper is that the relation between ERM and firm performance is contingent upon the appropriate match between ERM and the following five factors affecting a firm: environmental uncertainty, industry competition, firm size, firm complexity, and board of directors’ monitoring. Based on a sample of 112 US firms that disclose the implementation of their ERM activities within their 10Ks and 10Qs filed with the US Securities and Exchange Commission, empirical evidence confirms the above basic argument. The implication of these findings is that firms should consider the implementation of an ERM system in conjunction with contextual variables surrounding the firm.

The Dynamic Interactions between Risk Management, Capital Management, and Financial Management in the U.S. Property/Liability Insurance Industry

This study examines empirically how risk management, financial management, and capital management are related to each other in the property/liability insurance industry, thereby reflecting interactions in managerial decisions such as the choice of derivatives and reinsurance use, the allocation of asset risks, the determination of underwriting activities and liability risks, and the adequacy of capital levels. This research contributes to the literature by adopting structural equation modeling to capture not only the dynamic interactions among capital management, financial management, and risk management, but also the effects of internal integrated factors or external regulatory factors on these managerial decisions. Among the empirical findings of this study, it is shown that risk management, capital management and financial management should be assessed under an integrated framework as emphasized in the concept of enterprise risk management. In addition, regulatory requirements embedded in the insurance industry might play an essential role in the integration of managerial decisions.

Risk management in public sector research: approach and lessons learned at a national research organization

As the Canadian federal government's main research body and a public sector agency, the National Research Council (NRC) must manage numerous strategic as well as operational risks, including those at the project, program and portfolio levels. Such risks might arise from political and other stakeholder interests, intellectual property ownership and policy, funding structures, public perceptions of science and technology, occupational health and safety, management of highly qualified personnel, availability of receptor capacity for research being undertaken, and unknown markets for very new research areas, to name a few. Varying risk management practices have existed across NRC institutes and programs in the past as a result of the relative autonomy afforded to these groups. In seeking a more systematic approach, driven by both external and internal interests, NRC researched best practices, models and frameworks for risk management. NRC needed an appropriate model and approach for managing risk that could be applied throughout different levels and within the various arenas of its activities. The approach selected is based on the concept of enterprise risk management, allowing NRC to look not only at specific areas of risk but the larger picture – effectively assessing, controlling, exploiting and monitoring risks from all sources that might threaten the achievement of its goals. At the same time, such an approach also ensures that potential opportunities that could facilitate achievement of its goals are not missed. This paper shares some of NRC's findings of its research (including best practices), describes its current framework and approach, as well as some of its challenges.

Enterprise Risk Management In a Pharmaceutical Company

Risks are everywhere and in any activity. Many pharmaceutical companies are currently looking to better understand, anticipate, and be able to mitigate business risk in order to deliver the rewards of risk taking, and to minimize the frequency and impact of risk on the downside. Some of them use Enterprise Risk Management concept (ERM, developed by COSO) to establish an effective corporate management system. In the present paper, we analyze the integrated approach that is used by the company as the foundation of risk management within a company. The reader is offered a case of constructing ERM system in practice.

Convergence: A holistic approach to risk management

All too often, security practitioners tend to think about security purely as a logical issue. Locking down firewalls and structuring access to user accounts is only one part of the puzzle, however; other aspects of security are just as important in the enterprise. Marrying physical security with computer security can help to strengthen an organisation's overall risk profile, but Kent Anderson, a member of the Certified Information Security Manager (CISM) board within the Information Systems Audit and Control Association (ISACA), argues that to be truly effective, we must beyond this and embrace the concept of enterprise risk management. How can this best be achieved, and what will the result look like? This article examines some of the drivers for this holistic form of risk management, and outlines some best practice principles to attain its goals. Today's security practitioners feel more pressure and accountability to perform, yet never seem to have the resources to get the job done. Consequently, ''executives just don't get it'' is probably the most common explanation among frustrated professionals, but have we ever stopped to ask if maybe we're the ones who don't get it?

Bringing Investor Confidence Back to Alternative Investments: How Enterprise Risk Management is the Answer

The concept of enterprise risk management will be examined in the context of multi-strategy hedge funds and fund of hedge funds. This paper seeks to demonstrate that risk at these organizations has to be considered holistically and not in “silos”. A number of qualitative and quantitative tools will be suggested and their use will be demonstrated on such hedge funds as Amaranth. The result of implementing these tools will show that the risks in these funds were increasing months prior to their blow-ups. This finding will be used to demonstrate the need for qualitative filters at fund of fund investment committees to suggest redemption even though returns have not suffered. Having outlined the ERM concept for hedge funds and some tools that could be used to implement it, it will be shown how implementing ERM can lead to a less risky portfolio that should lead to greater investor confidence and a more stable business model.

A procurement fraud risk management model

The high occurrence of procurement fraud requires the management of an enterprise, the risk manager of the enterprise and the internal auditor to address procurement fraud risks effectively within the enterprise risk management concept. The purpose of the article is to explain a procurement fraud risk management process which will serve as a comprehensive framework for enterprise risk managers and for internal auditors to limit the enterprise’s exposure to procurement fraud as far as possible. The study by Venter (2005) on which the article is based proposes a procurement fraud risk matrix which can be used to manage fraud risks within the procurement function efficiently. This matrix is based on the Committee of Supporting Organizations of the Treadway Commission’s (COSO’s) Enterprise Risk Management ‐Integrated Framework which is specifically applied to address the procurement fraud risk problem.