Enterprise Risk Management Implementation Research Articles

EVALUASI PERAN APARAT PENGAWAS INTERNPEMERINTAH DALAM MANAJEMEN RISIKO PADAINSPEKTORAT KEMENTERIAN X

This study aims to evaluate the role of Government Internal Supervisory Apparatus in risk management at the Inspectorate of Ministry X, in accordance with applicable regulations. This research was conducted at Inspectorate of Ministry X, with a qualitative method through a case study approach. The data collection methods adopted in this study include document analysis, survey, and interviews. The results showed that The Inspectorate of the Ministry of X as Government Internal Supervisory Apparatus has not carried out its core role in implementing Enterprise Risk Management in accordance with the Institute of Internal Auditors Position Paper: The Role of Internal Auditing in Enterprise-Wide Risk Management. Core roles relate to providing objective assurance on the appropriateness and effectiveness of risk management. Other additional roles that may be carried out with adequate consideration have also not been fully implemented such as maintaining and developing the Enterprise Risk Management framework; devepoling risk management strategy for Board approval; and consolidated reporting on risk. While the roles that are not allowed to be carried out in Enterprise Risk Management are not carried out by internal auditors to maintain objectivity and independence when providing assurance services and consulting services. This research is expected to be an input to analyze the role of Government Internal Supervisory Apparatus in risk management at the Ministry of X. For other Government Agencies, this research is expected to be a reference for evaluating the appropriateness of Government Internal Supervisory Apparatus's role in risk management. For academics, the results of this study are expected to be used in subsequent studies to add insight and additional sources of information in conducting further research with a similar theme. This research has not conducted benchmarking with other government agency internal auditors regarding best practices in implementing Government Internal Supervisory Apparatus's role in risk management.

Enterprise risk management implementation challenges in medical laboratories in Harare, Zimbabwe.

Medical laboratories play crucial roles in healthcare, and effective enterprise risk management (ERM) is necessary to ensure business continuity, patient safety, and quality of care. In medical laboratories, ERM is important for enhancing patient safety, regulatory compliance and accreditation, quality management, business continuity, and cyber security. By following ERM principles and approaches, the medical laboratories can proactively manage their risks, improve patient safety, and maintain a high level of quality and reliability of outcomes. However, implementing ERM in medical laboratories faces unique challenges. This study explored the specific challenges and offers practical solutions for overcoming them to ensure successful ERM implementation in Harare, Zimbabwe. A cross-sectional survey was done through 41 self-administered questionnaires and interviews with medical laboratory staff from the six main medical laboratories in Harare. Data were analyzed using the Statistical Package for Social Sciences version 22. Quantitative data were analyzed using descriptive statistics such as frequencies and percentages. Qualitative data were analyzed using mean scores of Likert scale responses. The main challenges identified in the study included increased workload, staffing, organizational structures, timeliness of information, inadequate information technology support, and insufficient financial support in ERM. These can be addressed by portfolio management of risks, leveraging on cutting edge technology, restructuring to ensure swift responses to issues and redistributing staff workload, and training personnel to avoid burnouts and ensure maximum efficiency. Implementing ERM in medical laboratories requires understanding and addressing these challenges. By following the ERM principles and approaches the medical laboratories can proactively manage their risks, improve patient safety and maintain a high level of quality and reliability of outcomes ERM is still a new approach in the sector and needs further research.

Internal Auditors’ Characteristics, Internal Audit Effectiveness, and Enterprise Risk Management in Jordan: A Resource-Based View

Jordanian public-listed companies (PLCs) face significant internal, external pressures and risks that hinder their performance and survival in today’s high-risk business environment. The relatively recent implementation of Enterprise Risk Management (ERM) adds to its ineffectiveness, further complicating the situation. This study aims to examine the impact of internal auditors' characteristics on ERM effectiveness and internal audit effectiveness (IAE) from the Resource-Based View (RBV) perspective. Additionally, it explores the relationship between IAE and ERM effectiveness, as well as the mediating role of IAE. A quantitative cross-sectional research design was utilised, collecting data from Jordanian PLCs via questionnaires, with 119 final responses analysed using SPSS and SmartPLS softwares. The findings indicate that internal auditors' characteristics positively impact both ERM effectiveness and IAE. Furthermore, IAE positively impacts ERM effectiveness and serves as a partial mediator in this relationship. These results align with the RBV, highlighting that internal auditors' characteristics and IAE as valuable internal resources that foster sustainable competitive advantage. Practical implications include raising companies' awareness of the critical importance of internal auditors' characteristics and IAE, thereby offering a cost-effective solution to enhance ERM effectiveness.

Do Enterprise Risk Management and Good Corporate Governance affect the Performance of Insurance Companies in ASEAN-5 Countries?

This study aims to analyze the influence of Enterprise Risk Management (ERM) and Good Corporate Governance (GCG) on the performance and profitability of companies among 30 insurance companies in the ASEAN-5 countries during the period of 2018-2022. The Panel Data Regression method is utilized to analyze data obtained from financial reports and corporate sustainability reports. The results of the analysis indicate that the simultaneous implementation of ERM and GCG does not have a significant positive influence on the financial performance of insurance companies, measured by indicators such as Return on Assets (ROA), Return on Equity (ROE), Loss Ratio, Combine Ratio, and Tobins Q. It is noteworthy that some individual parameters show a positive influence on company performance. This suggests that ERM and GCG play a crucial role in enhancing performance and profitability in the context of insurance companies in the ASEAN region during the research period.

Enterprise Risk Management Implementation and Earnings Quality: An Empirical Investigation on Nigerian Financial Sector

Researches on Enterprise Risk Management (ERM) have gained relevance in accounting and finance literature in recent years, due to more stringent regulations following the global financial crisis. Based on this recent development, this study investigates whether compliance with Enterprise Risk Management implementation impact earnings quality of fifty (50) financial firms in Nigeria. Generalised Method of Moments (GMM) estimator and difference-in-differences analysis were used to test the hypothesis of the study. We also use content analysis method to evaluate the ERM disclosure of the selected financial firms. The results shows that compliance with ERM strategy improves earnings quality and performance. In addition, the result reveals that the implementation of ERM contributes 45.6% increase to earnings quality during the post-ERM period (2019-2023) using the difference-in-differences method. This study contributes to knowledge in accounting and finance literature with respect to ERM research in under-investigated context (Sub-Saharan Africa) with a specific focus on Nigeria.

Barriers to the implementation of enterprise risk management in Indian construction firms

Barriers to the implementation of enterprise risk management in Indian construction firms

Corporate Sustainability Performance: The Role of the Gender Diversity of the Board and Enterprise Risk Management

The research objective is to investigate the impact of board gender diversity on corporate sustainability performance, with enterprise risk management (ERM) as a moderating factor within health sector companies listed on the Indonesia Stock Exchange. The study adopts a secondary quantitative research approach and utilizes panel data linear regression analysis conducted through Econometric Views (E-Views). The study population consists of health sector firms listed on the Indonesia Stock Exchange from 2019 to 2022. The sample selection method used is purposive sampling, resulting in a sample size of 10 companies for the study. Secondary data is collected through the documentation method from the Indonesia Stock Exchange and the official websites of the selected companies. The findings reveal a negative relationship between board gender diversity and corporate sustainability performance, with a negative coefficient indicating that higher gender diversity among board members correlates with lower sustainability performance. Additionally, the study demonstrates that ERM strengthens the association between gender diversity and sustainability performance. Companies proficient in ERM implementation are better positioned to leverage the positive effects of gender diversity on sustainability performance. Understanding this interplay can assist organizations in making informed decisions regarding gender diversity policies and enterprise risk management strategies.

What’s Wrong with Enterprise Risk Management?

Enterprise risk management (ERM) was introduced in the 1990s and has since become expected by boards of directors and regulators as a sign of good management and good corporate governance. However, many organizations struggle to implement ERM, and still seek practical advice on ERM implementation. This article explains many of the reasons why organizations are unsuccessful in their efforts at implementation and provides practical solutions provided by an experienced risk manager and consultant, an ex-Chief Risk Officer, and an academic, all of whom have written extensively on the subject. This article should be of interest to practitioners involved in implementing ERM, to consultants in ERM, and to academics teaching courses on ERM, risk management, and related topics. This article also provides a base against which further future research can be performed as ERM best practices continue to evolve.

Analisis Risiko Operasional Berdasarkan Pendekatan Enterprise Risk Management (ERM) Pada Roti Kukus Manju Cabang Tuasan

In running a business there are definitely risks. Risks that arise from the internal and external environment of the business can result in the business experiencing losses. This research method uses a qualitative descriptive research method with data collection techniques originating from observations and interviews with the owner of the Manju Steamed Bread business, Tuasan Branch. This research will use Enterprise Risk Management (ERM), where ERM implementation is usually implemented by identifying risks, assessing and controlling risks. Businesses that use Enterprise Risk Management (ERM) can get risks ranging from low (low), medium (medium), high (high). This research aims to identify risks that may occur in the Manju Steamed Bread business, Tuasan Branch, then create a risk matrix to determine the worst risks that must be prioritized in control. The research results show that there are operational risks, namely employees not following steaming machine operating procedures, lack of maintenance of the machine and bread steaming equipment by employees and delays in the arrival of raw materials. This risk will affect the quality of taste, service, and can result in losses due to shop closures due to delays in the arrival of raw materials, so risk management is needed which aims to reduce operational risks that may occur.

Optimizing firm performance through contingency factors, enterprise risk management, and intellectual capital in Southeast Asian mining enterprises

Enterprise risk management (ERM) is a crucial aspect of corporate operations. This study examines the impact of environmental uncertainty, industry competition, and firm complexity on Enterprise Risk Management implementation and firm performance in the Southeast Asian mining industry. Utilizing data from 205 mining companies listed on Southeast Asian stock exchanges from 2016 to 2022, the analysis employs panel data regression methods. The findings reveal that environmental uncertainty does not significantly affect ERM, while industry competition positively influences ERM but negatively impacts firm performance. Firm complexity positively affects both ERM and performance. ERM mediates the relationships between industry competition, firm complexity, and performance, while intellectual capital moderates the effect of ERM on performance. These results underscore the strategic importance of integrating ERM practices and developing intellectual capital to enhance firm performance amidst competitive and complex business environments. The study contributes to the literature by providing empirical evidence on the nuanced relationships between these variables in the context of the Southeast Asian mining sector and offers practical insights for policymakers and industry leaders.

The Relationship between Respondents’ Characteristics and Their Perceptions of Enterprise Risk Management. Results of a Survey

The present study investigated whether responents’ socio-demographic characteristics influenced their personal views on the adoption and implementation of enterprise risk management. An online questionnaire was administered to employees of Italian artisan firms to collect data on the adoption and implementation of enterprise risk management, its determinants, and its relationship with organisational performance. Respondents’ responses were compared to their demographic characteristics to determine whether gender, age, education, position, and role may have influenced their opinions on enterprise risk management. The presence of a well-established risk culture in an organisation and the support of senior management were considered essential in the effective implementation of enterprise risk management in an organization and in positively influencing organisational performance. Select participant’s demographic characteristics had an influence on their views on the implementation of enterprise risk management. The results of this study add to the body of knowledge on enterprise risk management and can support risk managers to effectively and efficiently implement enterprise risk management.

INTEGRATING ENTERPRISE RISK MANAGEMENT (ERM): STRATEGIES, CHALLENGES, AND ORGANIZATIONAL SUCCESS

Implementing Enterprise Risk Management (ERM) is pivotal for organizations striving to navigate and excel within increasingly complex and volatile business environments. This paper explores the core principles of ERM and underscores its crucial role in achieving organizational objectives by enhancing decision-making, risk awareness, and resilience. It highlights the benefits and challenges of ERM implementation, with a strong emphasis on the empowering role of leadership in this process. It also emphasizes the necessity for strategic resource allocation, and effective integration into organizational processes. Additionally, the paper examines key factors that contribute to the success of an ERM program, such as adaptability and continuous improvement. Through real-world case studies, the paper illustrates how successful ERM implementation can significantly benefit organizations, demonstrating quantifiable improvements in operational performance and strategic outcomes. These discussions aim to provide a comprehensive understanding of the importance of ERM in modern business practices, advocating for its widespread adoption and continuous evolution to meet emerging business challenges.

Chief risk officer and audit fee: An investigation from financial industries in Indonesia

The appointment of a CRO (Chief Risk Officer) influences the implementation of ERM (Enterprise Risk Management), which reduces risk and lowers audit costs. Financial Services Authority Regulation No.17/2014 in Indonesia requires companies to have an RMC (Risk Management Committee), which is different from a CRO equivalent to a C-Level. This study examines the impact of a CRO on external audit costs. The data consists of financial companies listed on the Indonesia Stock Exchange (IDX) from 2011 to 2020. The results show that companies using a CRO have lower risk, thereby reducing audit costs. Additionally, the expertise of a CRO also impacts a higher ERM, which in turn affects the reduction of audit costs. This study contributes to the practical world by supporting the appointment of a CRO to reduce company risk. Thus, the company can deliver better performance.

Risk management practices and financial performance nexus: Evidence from MSMEs in Osun State, Nigeria

This study assessed the effect of enterprise risk management on the firm financial performance of Micro, Small and Medium-scale Enterprises in Osun state Nigeria. Precisely, the risk encountered, the adoption of risk management practices, the implementation of Enterprise Risk Management (ERM) practices, and the financial performance of micro, small and medium scale enterprises in Osun state Nigeria. Primary data was used for this study; a well-structured questionnaire was used to elicit data from 273 respondents. The study population consists of owners and managers of small and medium businesses in Osun state, Nigeria. Data were analyzed using descriptive analysis and was the inferential statistic used to test the hypotheses. The results showed that market (33.7%), strategic (57%), financial (46.9%), operational (34.2%), management (47.6%), and technological (45.4%) are risks prevalent to micro and small businesses, but most of the respondents disagreed that the relationship of their staff to the customer is poor. Risk acceptance with a mean score of (2.27 ± 1.21) is the most utilized risk management practice adopted by the MSMEs. The implementation of ERM practices shows that MSMEs more utilized setting of objectives (43.6%), risk identification (38.3%), risk assessment (36.2%), and control activities (31.2%) and the financial performance of the businesses was moderate (69.7%). The correlation analysis shows no significant relationship between the scale of business and the adoption of risk management practices. Also, the regression analysis shows that Risk identification (? = 0.388, p ?0.01) and Control activities (? = 1.096, p ?0.01) are the only ERM variables that significantly affect financial performance. The study concluded that the implementation of enterprise risk management practices has a significant effect on the financial performance of Micro, Small and Medium enterprises in Osun State, Nigeria.

Implementation of Enterprise Risk Management: A Case Study of a Public Sector Entity in the Northern Cape, South Africa

Since the advent of South Africa's democracy in 1994, there has been an increasing demand by stakeholders for several public services due to a variation of complex and challenging events that have taken place and reported both in social and academic circles. In the context of the Northern Cape, there has been a continued increase in unemployment and poor service delivery coupled with an inability of the Department of Economic Development and Tourism (DEDaT) to achieve clean audit reports from the Auditor-General of South Africa (AGSA). This development raises questions about the implementation of ERM processes. Thus, this study aimed to assess the implementation of ERM processes using DEDaT as a case study. The study sought to determine the ERM systems currently deployed and the extent to which the ERM components are utilized by DEDaT. Data was gathered through in-depth interviews using a qualitative approach. A sample of eighteen participants who are ERM role players at DEDaT described their knowledge and experiences on the implementation of ERM systems and how the components are applied. From the findings, two main themes, namely, ‘ERM systems deployed at DEDaT’ and ‘perceptions on ERM components that are utilized,' emerged with related subthemes. The study revealed that DEDaT has ERM systems in place, however there were gaps in key areas that need improvement to enhance the ERM instrument. Furthermore, the research found that a set of eight components were utilized to implement the ERM process. The study suggested recommendations to management for further research and policy direction on implementing ERM in the public sector.

The Role of the Board of Directors in the Implementation of Enterprise Risk Management in Malaysian Private Higher Educational Institutions

The Role of the Board of Directors in the Implementation of Enterprise Risk Management in Malaysian Private Higher Educational Institutions

Enterprise risk management and supply chain management: The mediating role of competitive advantage and decision making in improving firms performance

The complexity of risk management and supply chain optimization in the business context, especially in financial institutions such as banking, highlights several factors that require special attention. In the banking sector, where risk and operational smoothness are crucial, risk management and supply chain optimization play pivotal roles in maintaining stability and competitiveness. The objective of this research is to explore the extent to which the implementation of ERM (Enterprise Risk Management) and SCM (Supply Chain Management) can create a competitive advantage, influence decision-making, and ultimately impact company performance. The research methodology employed is quantitative. Data collection was conducted through the distribution of Likert-scale questionnaires with a score range from 1 to 5. The sample selection process utilized random sampling techniques, involving managers and staff working in State-Owned Enterprises (SOE/BUMN) in Indonesia. The study analyzed 263 samples, with data collected from February 2023 to June 2023. Structural Equation Modeling (SEM) with SmartPLS software facilitated data analysis. The results indicate that ERM significantly influences competitive advantage and decision-making, but it does not directly impact company performance. Similarly, SCM has a significant positive impact on competitive advantage and decision-making but does not directly affect company performance. Competitive advantage, in this study, did not prove to enhance firm performance or act as a mediator connecting ERM and SCM to company performance. However, decision-making significantly influences company performance and serves as a significant mediator in the relationship between ERM and SCM concerning company performance.

Gender diversity and enterprise risk management: An insight of a firm in the emerging market

Motivated by recent regulatory reforms to boost female representation on corporate boards, such as Indonesia corporate governance, this study aims to look into the influence of boardroom gender diversity on enterprise risk management (ERM). These reforms aim to strengthen corporate governance by allowing a pool of female directors to be recruited to directorship positions and providing female directors with a fresher and more independent perspective, consequently increasing board monitoring and internal control systems. As a result, the purpose of this study is to look into whether and how female directors might better align managers’ and shareholders’ interests by enhancing investment efficiency and corporate risk management. The purpose of this article is to determine whether and how gender diversity and chief executive officer (CEO) gender affect ERM implementation in Indonesia, a rising market. From 2018 through 2021, this study examines Indonesia’s publicly traded enterprises. The enterprises have been designated as state-owned enterprises (SOEs) and non-state-owned enterprises (NSOEs) for further study. ERM implementation is evaluated using the ERM index. According to the research, gender diversity and CEO gender play a crucial role in organisational decisions. The authors demonstrate that the participation of women on corporate boards is linked to the use of ERM. Women CEOs also boost ERMs, according to the statistics.

Does Enterprise Risk Management Improve Performance and Create Shareholder Value? Empirical Evidence of Listed Firms on the Ho Chi Minh Stock Exchange, Vietnam

This study applies Agency Theory, Stakeholder theory, and Modern Portfolio Theory, which revolves around the way enterprises are organized, managed, and controlled and guides the managers’ decisions in ensuring stability and creating value based on satisfying the interests of stakeholders, to analyze the impact of enterprise risk management implementation on the firm’s performance and value creation of 285 listed firms on the Ho Chi Minh Stock Exchange, Vietnam, from 2017 to 2022. Feasible Generalized Least Squares (FGLS) estimation results show that risk management practices positively affect firm value and business performance. In addition, the study also indicates that the variables of Big 4 auditor, inspection committee presence, sales growth, firm age, firm size, and leverage have affected firm performance and value differently. The findings have several implications for investors, managers, and researchers.

Board diversity and enterprise risk management: Study in emerging and developed countries

Globalization and the uncertainty of the business environment pose challenges to companies. The unpredictable COVID-19 pandemic has caused a significant global recession. For this reason, every company is required to improve governance and risk management practices to reduce the impact of this uncertainty. This study investigated the effect of board diversity on enterprise risk management (ERM) in companies in the USA, China, and Indonesia using the enterprise risk management index (ERMI) to measure ERM. ERMI is a means to assess an organization’s ERM implementation effectiveness index based on its ability to achieve its goals based on four dimensions (strategy, operations, reporting, and compliance). Different findings were uncovered in the 3 countries studied using the panel regression analysis technique on a sample of 629 companies during an observation period of 2011–2021. In the USA, a country known for prominent individualism, overall gender diversity does not have a significant relationship with risk-management-related decision-making. In China, gender and cultural diversities negatively impact ERM. On the other hand, in the Indonesian context, skill diversity has no significant relationship with risk management, while tenure diversity has a negative effect on ERM. The results of this study provided recommendations for regulators and company management in developing good corporate governance.