Enterprise Risk Management Maturity Research Articles

Implementation of Enterprise Risk Management in Medium-Sized Priority Sector Companies in East Java

Enterprise Risk Management (ERM) has the benefit of enhancing organizational effectiveness, risk reporting, and improving business performance. The maturity measurement of ERM implementation is crucial in deducing risk management conditions and disparities within the company as means to achieve a more targeted ERM pursuance, one which is beneficial in assessing the company's condition. This study used sixteen criteria of ERM Maturity Models, to measure the maturity level of ERM implementation carried out by medium-sized industrial companies in priority sectors in East Java. Data were obtained from 137 company directors or managers of Medium Industry companies dispersed across 38 districts/cities in East Java among 6 priority sectors. Results showed that 43.5% and 46.6% of companies that experienced sales growth and an increase in net profit, respectively, are companies with optimal implementation of ERM. Meanwhile, 67% of companies that underwent a decline in sales performance and net profit turned out to be companies with weaker ERM implementation levels.

Enterprise Risk Management Maturity: A Clinical Study of a U.S. Multinational Nonprofit Firm

This study, which is based on actual events, presents a dynamic analysis of the development, implementation, and post-implementation review of establishing an enterprise risk management (ERM) system for a U.S. multinational nonprofit firm over a 5-year period, 2015–2020. Using the Risk and Insurance Management Society Risk Maturity Model (RIMS RMM), questionnaire-based risk data and multi-dimensional risk mapping indices are used to identify and prioritize the firm’s key strategic risks leading to the development of mitigation strategies whose performance are reviewed post ERM implementation, including during the 2020 Coronavirus pandemic. The results reveal that the firm’s risk management system has been ad hoc and uncoordinated. Post-implementation review of the ERM program shows improvements in financial and operating positions resulting from risk diversification, enhanced profitability, exploitation of natural hedges, and improved board governance. The results further show that the recommended mitigation strategies have been effective in managing the adverse impact of the pandemic. Overall, the evidence offered in this study provides further support on the valuation benefits of ERM maturity within a real-world environment.

Enterprise Risk Management Maturity Levels of the Insurance Industry in Botswana

Enterprise Risk Management (ERM) has become a necessity in the financial sector to fulfil stakeholder expectations. Studies confirm that ERM impacts positively on the performance of firms. The main objective of the study was to assess ERM maturity levels of the insurance industry in Botswana. This was achieved through first designing a framework to measure enterprise risk management maturity levels. The ERMMF incorporated elements from COSO’s ERM framework and the AON risk maturity model obtained through literature review. Data were sourced from four strata; 9 long term insurance companies (15 respondents), 11 short-term insurance companies (19 respondents), 3 reinsurers (5 respondents), and 44 brokerages (75 respondents). While all organisations in the population were used, a sample of 114 out of possible 134 respondents was used. Data were analysed using SPSS version 16. The findings revealed that the insurance industry in Botswana had somewhat implemented ERM. It is therefore recommended that the insurance industry in Botswana should take ERM as a continuous process for growth in ERM maturity levels as such an improvement is highly likely to enhance their performance.

Yapım Firmalarının Kurumsal Risk Yönetimi Olgunluğunda Risk Yöneticisinin Rolü

Addressing the risk management process with a holistic approach, enterprise risk management (ERM) enables efficient business processes to be carried out. Achieving success in time, cost and quality factors for complex projects in the constantly evolving construction industry requires systematic and holistic management approaches. In the management process of the construction projects, managing the possible risks from a holistic perspective is critical to the success and efficiency of the construction projects. However, in the companies operating in the construction sector, the transition steps from project-level risk management to corporate risk management have just begun and the level of maturity has not yet been reached. In this context, the main purpose of this study is to reveal the effect of the existence of the risk manager and corporate risk managament structuring on the corporate risk management maturity level of the construction companies. For this purpose, six main factors (stability of the board and senior management, having corporate risk management, risk identification, analysis and response, integrating corporate risk management into business processes, setting targets, and sufficient resources) are obtained as a result of a comprehensive literature review and a survey field study was organized. The data were analyzed with descriptive statistics and ANOVA analysis methods. As a result of the study carried out, the effect of the presence of the risk manager on the maturity level of corporate risk management in the construction companies and the impact and importance levels of the basic factors on the maturity of ERM were determined and compared. This study shed light on future studies to be done by examining the conceptual framework regarding ERM maturity levels in production companies.

Enabling enterprise risk management maturity in public sector organizations

IMPACT This article addresses an important public sector management issue—what and how organizational capabilities can be mobilized for effective deployment of enterprise risk management (ERM) in public sector organizations. The authors present a framework providing insights to public sector managers for enhancing risk management practices ABSTRACT Public sector reforms have led to risk management gaining prominence as a means for effective service delivery and a tool for accountability. The public sector has seen regulatory changes intended to empower managers to engage in appropriate risk management practices. The authors present a framework for effective enterprise-level risk management in public sector organizations. The framework includes three essential enablers of risk management and provides conceptualizations for guiding future empirical research.

Amelioration De La Maturite Des Entreprises En Gestion Des Risques Par La Maintenance

Statistics on accidents at work, particularly in Morocco, remain worryingly high. This situation raised a general awareness in the country and many decisions have been taken and corrective actions have been elaborated in order to enhance enterprise risk management maturity. This maturity is based on several key factors including maintenance.In this paper we propose a methodology to mitigate and control maintenance generated risks which in turn will allow enterprises to enhance their maturity in risk management.

Managers’ Support – A Key Driver behind Enterprise Risk Management Maturity

Abstract Severe consequences of the global fi nancial crisis resulted in re-thinking the risk management processes and approaches, highlighting the need for a comprehensive risk management framework. Consequently, more and more companies are moving away from the Traditional “silo-based” Risk Management (TRM) to a more holistic approach known as Enterprise Risk Management (ERM). This paper presents results of both exploratory and empirical research. First, we develop ERM Index that measures maturity of ERM process within the company. Then, we present empirical results on the level of maturity and determinants of risk management system development in listed Croatian companies. Research indicates low levels of ERM development: even 38 per cent of analysed companies have no elements of ERM system, from which 22 per cent do not manage corporate risks at all. Except the company’s size supported by the economies of scale argument, managers’ support is the most important determinant of ERM system maturity in Croatian companies.

The challenges of and solutions for implementing enterprise risk management

Enterprise risk management (ERM) began to take root in the late 1990s and has since become generally recognized as an expectation of good management and corporate governance. However, as evidenced by surveys and research, many companies still struggle with ERM implementation. This article explores the challenges companies face when implementing ERM and offers solutions for firms struggling with the concepts and execution. We draw upon Hydro One's experience in achieving ERM maturity as a best practice case study. The company's ERM methods have been researched and documented extensively. With over 15 years of ERM success, Hydro One is an excellent organization to benchmark for ERM best practices.

An analysis of the maturity and strategic impact of investments in ERM

Over the past decade, expectations for more effective oversight of risks by boards of directors have significantly increased. These expectations emanate from stock exchanges, regulators, credit rating agencies and other key stakeholders. Proponents of enhanced risk oversight argue that an increased understanding of enterprise-wide risks provides strategic benefit by helping the board and management identify and manage risks that may impact the achievement of strategic objectives while at the same time helping the board monitor the extent of risk-taking on the part of management in their desire to meet these objectives. In response to these growing expectations, some boards have asked management to explore implementation of a more holistic, top-down approach to risk oversight widely known as enterprise risk management (ERM) while others have not. Institutional theory would suggest that a number of organizations implement minimal elements of ERM for symbolic reasons, lacking substance in risk oversight. In contrast, agency theory would suggest that boards embrace explicit and robust risk oversight activities to monitor management’s risk-taking actions, and resource dependence theory would suggest that they also do so to help the organization achieve strategic objectives. Little is known about the way in which boards and management organize their processes and the impact of those processes on the level of ERM adoption. More importantly, little is known about the extent to which ERM is perceived to provide strategic benefit to those organizations that have invested in developing a robust ERM process. Based on data gathered from 645 survey responses from executives of organizations spanning a number of industries and sizes, we find that organizations with greater ERM maturity are significantly more likely to have taken steps to formally engage the board and senior management in specific risk oversight tasks (consistent with agency theory), and certain board and management risk practices are associated with perceptions that ERM provides strategic advantage (consistent with resource dependence theory).

Investigating Enterprise Risk Management Maturity in Construction Firms

Enterprise risk management (ERM), as a holistic approach to risk management, has been advocated in the construction industry. The objectives of this paper are to assess the ERM maturity in Chinese construction firms (CCFs) based in Singapore and uncover how ERM was implemented in these firms. Through a questionnaire survey with 35 CCFs, the data relating to ERM implementation were collected. The analysis results indicated a low level of ERM maturity in these firms, and the positive association between ERM maturity and firm size. In addition, risk communication, objective setting, and risk-aware culture were the top three scores, while formalized key risk indicators and a risk management information system were the bottom two scores. Moreover, three case studies were conducted. The cross-case comparison results substantiated the survey findings, highlighted the influence of the parent firms on the ERM implementation, and indicated that the firms without formal ERM implementation can still have some practices consistent with the ERM fundamentals. These empirical results are arguably the first to be presented for the construction industry and therefore add to existing knowledge of ERM. In addition, various organizational issues have been identified that may influence ERM maturity. The future development of the ERM body of knowledge can, for enhancement purposes, take into account ERM maturity as well as the organizational issues for implementation. Furthermore, the ERM maturity of Singapore-based CCFs can serve as a ballpark benchmark, with which the other firms can compare in terms of ERM practices, and the similar research design and method can be used to investigate ERM implementation in CCFs located in other countries. Therefore, this paper significantly contributes to the ERM body of knowledge.

An Analysis of the Maturity and Strategic Impact of Investments in ERM

Over the past decade, expectations for more effective oversight of risks by boards of directors have significantly increased. These expectations emanate from stock exchanges, regulators, credit rating agencies and other key stakeholders. Proponents of enhanced risk oversight argue that an increased understanding of enterprise-wide risks provides strategic benefit by helping the board and management identify and manage risks that may impact the achievement of strategic objectives while at the same time helping the board monitor the extent of risk-taking on the part of management in their desire to meet these objectives. In response to these growing expectations, some boards have asked management to embrace a more holistic, top-down approach to risk oversight widely known as enterprise risk management (ERM) while others have not. Little is known about the way in which boards and management organize their processes and the impact of those processes on the level of ERM adoption. More importantly, little is known about the extent to which ERM is perceived to provide strategic benefit to those organizations that have invested in developing a robust ERM process. Based on data gathered from over 750 survey responses from executives of organizations spanning a number of industries and sizes, we find that organizations with greater ERM maturity are significantly more likely to have taken steps to formally engage the board and senior management in specific risk oversight tasks, and certain board and management risk practices are associated with perceptions that ERM provides strategic advantage.

Developing Fuzzy Enterprise Risk Management Maturity Model for Construction Firms

AbstractConstruction firms have been seen as prime candidates for enterprise risk management (ERM) adoption. The ERM maturity assessment helps them to identify weak areas of their ERM implementatio...

An ERM Maturity Model

In the recent years, Enterprise Risk Management (ERM) has emerged as a new risk management technique aimed to manage the portfolio of risks that faces an organization in a integrated, enterprise-wide manner. Unlike traditional risk management, where individual risk categories are managed from a silo-based perspective, ERM involves an holistic view of risks allowing to take into account correlations across all risk classes. The academic literature on ERM is focused on two main aspects: the analysis of the factors that influence ERM adoption and its effects on firms performances. No studies have been conducted yet to propose robust and rigorous models to evaluate the quality, or maturity, of ERM programs implemented by firms. The aim of the research described in this paper is to fill this gap in the literature. In order to build a rigorous ERM maturity model, we have run an e-mail Delphi procedure involving a panel of worldwide experts on ERM and reached their consensus on the selection of a set of ERM best practice parameters, which are used to develop a structured questionnaire to be administered to firms. Experts consensus in obtained also on the scales and the scores for each questionnaire answer option. The output of the Delphi method is a scoring model that can be used to assess the maturity of an ERM program by administering a questionnaire composed of 22 closed-end questions to firms: answers are collected and scored, and all scores are combined in a single final score, the ERM Index (ERMi). The robustness of the model has finally been tested on a small sample of firms. We foresee two different uses of the ERMi maturity model, one by scholars for further quantitative research on ERM topics, and one by practitioners, as ERMi is suitable to be used by firms for a self-assessment of their ERM programs (internal use), and by consultancy firms, auditors and rating agencies (external use). The difference with other existing maturity models is its solid scientific base, the rigour with which it has been designed and the fact that it is derived from a Delphi procedure involving leading ERM experts who reached consensus on the model detailed design.

Three key enablers to successful enterprise risk management

<para xmlns:mml="http://www.w3.org/1998/Math/MathML" xmlns:xlink="http://www.w3.org/1999/xlink"> Enterprise risk management (ERM) refers to a set of processes that enables the effective management of the risks, opportunities, and expected and unexpected events that may affect the enterprise. The successful implementation of ERM is a challenging task in part because it requires collaboration among multiple business units of different sizes, scope, and capability, each facing what it perceives as unique risks. Other difficulties with ERM implementations include lack of adoption of an enterprise-wide governance model, lack of a common risk language (e.g., taxonomy), and uneven levels of maturity within an organization regarding the management of risks. This paper establishes three conceptual frameworks that provide a basis for an enterprise embarking on ERM: 1) a risk management cycle; 2) a risk-related taxonomy; and 3) an ERM maturity model. The risk management cycle provides a discipline to consistently and coherently manage virtually all risks in the enterprise. The risk taxonomy provides a foundation for clear and concise communication about risk across the enterprise to enable better risk management. The ERM maturity model, and its associated capability assessment, allows an organization to determine gaps in its current risk management processes and define ways to improve those ERM capabilities. Together, these three frameworks are key enablers for a successful ERM implementation and ongoing operation. </para>