Enterprise Risk Management Implementation Research Articles

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.

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.

Corporate social responsibility practices and enterprise risk management of the GCC Islamic banks

This study intends to investigate the impact of CSR practices on ERM implementation, focusing on Islamic banks operating in Gulf Cooperation Council (GCC) countries. Following the banking industry’s collapse during the 2008 financial crisis, there has been a notable rise in the enactment and literature of Corporate Social Responsibility (CSR). Although the influence of CSR practices on performance, trust, and reputation has been extensively researched, limited research studies have examined their impact on enterprise risk management (ERM). The study uses secondary data obtained from the annual reports of 23 Islamic banks between 2011 and 2020. CSR practices and ERM implementations were scored using content analysis. Using panel regression techniques, we find a significant positive relationship between CSR practices and ERM implementation for listed Islamic banks over the sample period. The relationship remains intact across two distinct ERM measures and various estimation methods. The findings of the study contribute to the literature by offering valuable empirical evidence of the effect of corporate social responsibility practices on enterprise risk management implementation in the GCC Islamic banks. The study suggests that executives, policymakers, and regulators of Islamic banks in the GCC should support and endorse socially related initiatives to aid in the successful implementation of ERM.

A Case Study of Enterprise Risk Management Implementation and its Impact on Sustainability Performance in State Government-Linked Company

Enterprise Risk Management (ERM) is an approach that systematically assesses, treats, monitors, and reviews risks to enhance an enterprise’s value and its ability to anticipate and prepare for imminent risks. Previous studies have mainly focused on the impact of ERM implementation on financial performance, while its relationship with non-financial performance, particularly sustainability performance, has received less attention. This study aims to explore the level of ERM implementation and develop a framework to investigate its effect on sustainability performance, encompassing economic, environmental, and social aspects. The study proposes a questionnaire survey to be distributed to respondents involved in risk management implementation, such as the risk committee, risk management workgroup, and the top corporate risk working group, among state government-linked companies. By gathering insights on companies’ ERM implementation and sustainability performance, the study aims to conceptualize the relationship between the two. For data analysis, the statistical package for social sciences (SPSS) is proposed to investigate relationships between constructs and latent variables. Understanding the penetration level of ERM implementation and its impact on sustainability performance will offer valuable insights for formulating strategies to improve the overall performance of state government-linked companies.
 Keywords: enterprise risk management, sustainability performance, COSO framework, government linked companies

Efficacy of Enterprise Risk Management in Enhancing Sustainability and Financial Performance in the Solar PV Industry: A Conceptual Framework

As an alternative to fossil fuels, solar PV electricity can help mitigate global warming and improve the environment by lowering greenhouse gas emissions (GHG). More nations have developed programs to encourage the production and use of PV electricity, considering the potential of renewable energy for sustainable development. The government of Malaysia wants solar PV to be the primary source of renewable energy by 2030. To reduce global warming, renewable energy technology must be implemented more widely. However, the production of solar photovoltaic modules raises serious sustainability concerns. These concerns include using conflict minerals, toxicity, and limited supply or supply chain governance risks of rare materials. Even though solar energy projects are technically feasible, stakeholders still view the region’s initiatives as risky due to ongoing governance problems. Domains related to solar project deployment that involve installation, operation, and management are particularly susceptible to governance issues, such as a lack of accountability and transparency. Renewable energy investments upfront are risky and expensive. Risks in the solar PV value chain include subpar design and manufacturing decisions, inventory losses, quality problems during the execution process, and cultural and societal problems brought on by the absence of an effective risk management system. This study thus investigates how the implementation of ERM influences the company’s financial performance. Enterprise Risk Management (ERM) is a technique that regulates, and coordinates offset risks all over the firm to manage and integrate all risks holistically. As a result, this paper provides a conceptual and theoretical framework for how corporations use risk management to lower the cost of capital and improve sustainable development in the solar PV industry. The suggested theoretical and conceptual framework, supported by stakeholder and legitimacy theory, provides a foundation for empirically validating the entangled interaction between the relevant variables. It is advocated that measuring variables such as enterprise risk management, financial performance, and sustainability performance be based on previous research and frameworks and recommendations produced by major organizations. The purpose of this paper is to guide Malaysian solar PV companies in the implementation of sustainability and risk management.
 Keywords: enterprise risk management, sustainability, solar PV, financial performance

Triangulating Risk Profile and Risk Assessment: A Case Study of Implementing Enterprise Risk Management System

Establishing an enterprise risk management (ERM) system is widely viewed as providing firms with the tools and processes needed to build resilience and expertise, enabling them to manage the consequences of crises that have led to the collapse of major firms across different industries globally. Intended for use in advanced accounting, auditing, and finance courses, this case study (of a true event) describes the development and implementation of an ERM system for a U.S. multinational nonprofit firm during the 2015–2021 period. The case study’s main learning objectives are several-fold. First, couched within the recent economic environment, it informs students on some of the more important academic and applied research on corporate risk management. Second, students will learn to analyze the content of a questionnaire designed to capture the integrated effects of the firm’s risk culture, risk structure, risk governance, and control for establishing its risk profile. Third, they will learn to create and apply multi-dimensional risk indices to measure and prioritize the firm’s risk exposures. Finally, the last learning outcome focuses on strategies to triangulate the firm’s overall risk profile and risk prioritization results to construct mitigation strategies that build resilience and create value through risk diversification, information signaling, the exploitation of natural hedges, and enhancing the board’s governing efficiency. The nonprofit nature of the firm in this case study introduces no methodological or conceptual constraints or limitations in applying the proposed risk management methodologies to for-profit or publicly traded firms.

The Effects of Enterprise Risk Management on the Performance and Risk of Vietnamese Listed Firms: Evidence from Abnormal Enterprise Risk Management Index

Purpose: This paper examines the effects of Enterprise Risk Management (ERM), as measured by the Abnormal Enterprise Risk Management Index (ABERMI), on the performance and risk of Vietnamese listed firms.
 Design/methodology/approach: The paper employs a combination of three regression methods (Pooled Ordinary Least Squares, Fixed Effect Model and Random Effect Model) to test the effects of Enterprise Risk Managment on the performance and risk of Vietnamese listed firms in the period of 2010-2020. In addition, a two-stage re-gression model is used to calculate the ABERMI.
 Findings: The findings show that firms with effective enterprise risk management (ERM), as evidenced by their low abnormal enterprise risk management index, can enhance their business performance measured by Tobin's Q. Furthermore, good ERM helps firms reduce the risk of bankruptcy. However, the research proves that ERM is not associated with return on total assets and systematic risk.
 Research limitations/implications: Firm can employ Enterprise Risk Management (ERM) to efficiently and effec-tively manage risk. Additionally, applying a standard might further enhance the quality of risk management efforts by managers. Authorities can encourage the implementation of ERM to safeguard investor's wealth and indirectly protect the Vietnamese economy.
 Originality/value: Through a comprehensive analysis of various methodologies, this paper aims to uncover positive outcomes in exploring the impact of Enterprise Risk Management (ERM) on both risk and performance within the setting of Vietnamese listed firm.

Analysis of The Influence of Enterprise Risk Management Implementation on Company Performance and Company Value

This study aims to explore the degree to which the implementation of enterprise risk management (ERM) affects company performance and value. Assessing the level of ERM implementation is done by using six components derived from governance and firm operating activities. This study also used board of directors, firm size, leverage and return on equity (ROE) as control variables. The population in this study include Technology, Infrastructure, transportation and logistic sector listed on the Indonesia Stock Exchange from 2018 to 2020. Samples were taken using purposive sampling method which amounted to a total of 52 companies. The result of the first model shows that financial performance of ROA, ERM Implementation, Leverage, Return on Equity, BODSIZE and Firm Size variable effect simultaneously. But ERM Implementation only partially influences ROA. In measuring Firm Value of Tobin’s Q, the effect of ERM implementation, BODSIZE, Size, Leverage and ROE were assessed simultaneously. On the other hand, ERM implementation and BODSIZE only partially impact Tobin’s Q.

Peningkatan Kapabilitas Internal Audit Instansi Pemerintah

In implementing supervisory duties, internal auditors must have capabilities that consist of capacity, authority, and competency. The level of capability is measured using six elements of the Internal Audit Capability Model. This study aims to determine the efforts to strengthen the Inspectorate General of Ministry X in achieving level 4 capability of Government Internal Supervisory Apparatus. Internal audit capability level 4 is an excellent assurance of governance, risk, and control from the organization. Therefore, the role of internal auditor as a strategic counterpart is needed. Furthermore, obstacles and challenges were analyzed and evaluated for this Inspectorate General of Ministry X. The research used a qualitative method with a case study approach. Document reviews and interviews are used to collect the data. The results showed that several efforts had been made to improve internal audit capability based on BPKP Regulation No. 8 of 2021 concerning Capability Assessment of Government Internal Supervisory Apparatus. However, there is still an element of Internal Audit Capability Model at level 3 based on the self-assessment results, while others have not fully met the infrastructure for level 4. It is necessary to evaluate for three consecutive years and implement Enterprise Risk Management comprehensively. Thus internal auditor can utilize Enterprise Risk Management for its supervisory activities. The results of this study can also contribute to other institutions that are working to achieve internal audit capability level 4

Navigating Risk in the Modern Business Landscape: Strategies and Insights for Enterprise Risk Management Implementation

As businesses actively seek ways to safeguard their valuable data and resources, efficient defense techniques are paramount [1]. The surge in cyber threats, driven by malicious attacks and cybercrime fueled by internet technology and mobile apps, emphasizes the urgency for comprehensive risk management strategies [2]. Effective risk management strategies have become indispensable for competitive businesses [1]. ERM entangles determining, evaluating, and thwarting potential hazards that endanger business objectives [3].
 Successful ERM implementation faces challenges like corporate culture, board knowledge, excessive risk lists, undefined timeframes, and engagement barriers [4]. Solutions include fostering transparency, improving board education, focusing on crucial risks, defining timeframes, and making ERM engaging for employees [4]. Key components of effective ERM include governance, strategy, performance assessment, communication, and information sharing [5]. For future research, exploring the integration of emerging technologies in ERM and studying the long-term impacts of successful ERM implementations holds promise [6]. A strong risk culture, defined roles, and transparent communication are essential for sustainable ERM success [7]. To thrive in a dynamic business landscape, organizations must build a robust risk culture that permeates every level of their operations [7].

The impact of enterprise risk management on financial performance: Evidence from the GCC Islamic banks

Enterprise Risk Management (ERM) is a contemporary trend that has gained momentum in recent years. ERM is a comprehensive approach to risk management that considers both operational and strategic risks that affect business objectives and success. The present research investigates the impact of ERM on the financial performance (FP) of listed Islamic banks in the Gulf Cooperation Council (GCC) countries. This study takes a quantitative approach, employing secondary data collection methods and content analysis. The study analyses a sample of 221 yearly observations from 23 listed Islamic banks in the GCC from 2011–2020. The ERM implementation and FP measures were derived from previous studies. The study discovered that ERM implementation is associated with an increase in accounting performance but not with changes in market performance for Islamic banks. Our study confirms that Islamic banks perform better in the short term after implementing ERM controls but have no impact on long-term value creation. This study provides valuable insight on the benefits of enhancing GCC Islamic banks' ERM implementation decision-making processes. Finally, the empirical findings can assist managers, policymakers, and regulators in improving bank performance by implementing best practices of ERM in GCC Islamic banks and countries with similar socioeconomic environments.

Effect of enterprise risk management on firms’ outcomes with the moderating effect of knowledge management

Purpose This study aims to test the effects of enterprise risk management (ERM) on firms’ outcomes and the moderating role of knowledge management (KM) on ERM–firms’ outcomes relationship. Design/methodology/approach Data were collected via a questionnaire survey among public listed companies on the principal stock exchange market in Malaysia. A total of 124 questionnaires were received by mail questionnaire. The results were examined through structural equation modelling and partial least squares. Findings The outcomes specified that ERM has a positive and noteworthy influence on firms’ outcomes, and KM has a moderating influence on the correlation among ERM and firms’ outcomes. Research limitations/implications The qualities, procedures and laws of the Malaysian corporations chosen as the sample firms, as well as their regulations, may not be representative of all other countries. Moreover, this study considered only one variable as a moderator, while there are many variables that different studies can consider as moderator or mediators. Practical implications The results of this research imply that employees’ awareness and knowledge of events, opportunities and risk, along with their engagement in the institute’s strategy, are critical for risk management and controlling. For the managers, the results of this research can be helpful to their businesses by identifying the effective KM capability that may enhance their positive outcomes. Managers and organizations can use KM as an instrument to increase ERM effect on firms’ outcomes. Social implications KM and ERM are both significant intangible resources that are hard to imitate and are uniquely specified programs, which are important contributors to firm success in the long run. Moreover, the contingency theory of ERM was proved through the results of this study as it was identified in the public companies, that implementation of ERM as a strategic management practice, by organizations along with an effective KM may enhance the achievement of objectives and outcomes. Originality/value This study helps to measure ERM comprehensively and how intangible assets such as KM can affect the comprehensive risk management process and its effectiveness.

Modified of ERM Index for Southeast Asia

This study, conducted between 2016–2021 on Southeast Asian mining companies, introduces the Modified Enterprise Risk Management (ERM) Index (MERMi) to measure the implementation of ERM based on the COSO 2017 principles. The study found that ERM implementation is influenced by industry competition, company complexity, international diversification, and financial leverage. Meanwhile, company size and complexity, along with ERM and industry competition, positively impact firm performance. However, international diversification and financial leverage do not have a significant effect on firm performance. The study also concludes that there are no significant differences between the factors influencing ERM implementation in Southeast Asia and in advanced ERM implementation countries such as the USA, Europe, and Germany. The findings emphasize the importance of integrating risk management into the corporate governance of the mining sector in Southeast Asia. The limitations of this research include the lack of precise company disclosures on ERM implementation, which could be addressed through more research in other sectors and by using ISO 31,000 as a replacement for measuring instruments.

Factors Influencing Enterprise Risk Management Implementation of Construction Firms in Lagos State, Nigeria

Factors Influencing Enterprise Risk Management Implementation of Construction Firms in Lagos State, Nigeria