Enterprise Risk Management Process Research Articles

Do Enterprise Risks Management, Green Intellectual Capital and Business Ethics Improve Sustainable Finance At Financial Institutions In Indonesia?

Purpose: This study aims to test and analyze the effect of Enterprise Risk Management (ERM), Green Intellectual Capital (GIC), and Business Ethics (BE) on Sustainable Finance (SF).
 
 Theoretical reference: The theory of legitimacy was first expressed or presented by (Dowling & Pfeffer, 1975). Tracing back to its roots, the term "legitimacy" comes from the Latin word "legitimus", which translates to "according to law" (Danovan, O, 2000).
 
 Method: This research uses a quantitative descriptive verification method. The data used in this study are secondary data in the form of financial reports, annual reports and sustainability reports on the idx website. The population in this study are financial services companies listed on the IDX for the 2018-2021 period. The model in this study uses multiple regression, because the independent variables in this study consist of several variables.
 
 Results and Conclusion: The results showed that ERM has a positive effect on sustainable finance, GIC has a positive effect on sustainable finance, and BE has a positive effect on sustainable finance. ERM, GIC, and BE can benefit companies in several ways, including improving financial performance, reducing costs, and improving reputation. The results of this study contribute to the development of management accounting and business ethics that sustainable finance is influenced by several important factors, namely ERM, GIC, and BE.
 
 Implications of research: Research shows that ERM can improve financial sustainability in financial institutions in Indonesia, the implication of which is the importance of awareness towards more holistic and integrated risk management within companies. This may mean financial institutions should focus on developing more effective ERM processes, which can help them identify and manage risk in a more efficient way. This research can be used to enrich the sustainable finance literature, especially regarding the development of its measurement. The index measurement uses a disclosure checklist measurement and uses dumies so that it allows the appearance of subjectivity. There is a need for direct verification of some sample companies.

Accounting and analytical provision of enterprise risk management in the conditions of the state of war: identification, assessment, measurement and display of risks

The research is dedicated to the current issue of improving the accounting and analytical support for enterprise risk management in conditions of a military state. It analyzes the processes of risk identification, assessment, measurement, and representation in financial reporting, taking into account International Accounting Standards and qualitative assessments. A conceptual approach is proposed to enhance the enterprise risk management process through the detailed implementation of three blocks of analytical procedures: research and identification, risk assessment, analysis, and neutralization, which involves its integration into the accounting and analytical support system for enterprise risk management. Based on the analysis of reporting of Ukrainian enterprises, the most common risks arising in modern conditions are identified. A classification of risks by their origin is proposed, allowing for the systematization of various types of reserves, provisions, and funds that are formed to reflect risk events in accordance with accounting standards. The analytical and applied support for risk representation in accounting is improved through the development of an analytical matrix of risk impact on events in reporting. It enables the consolidation of information on the likelihood and significance of risks in a unified format and establishes the appropriateness of reflecting reserves and provisions in accounting. The research results have practical significance and can be utilized by enterprises to enhance their risk management systems and effectively represent risk events in financial reporting, which will contribute to risk reduction and minimizing losses for enterprises in conditions of a military state

Peculiarities of strategic management of risks of economic activity of enterprises in conditions of systemic crisis in Ukraine

The role of risk as a base category in the enterprise management system is substantiated, which determines the possibility of losses and additional costs and, at the same time, is a necessary condition for profit. The essence and components of the process of economic risk management at the enterprise are investigated. It is determined that the process of economic risk management characterizes the combination of the following main components: identification and assessment of the level of risk; making management decisions and choosing risk management tools; implementation of adopted risk management decisions; control over the implementation of management decisions and assessment of their effectiveness. The composition of internal regulatory documents that can be used to regulate economic relations in the field of risk management at the enterprise is determined. Principles and peculiarities of formation of risk management strategy at the enterprise in conditions of systemic financial and economic crisis are organized. It is substantiated that strategic risk management should be based on the principles: complexity, adaptability, analytics, economy and scientific substantiation. The main stages of formation of strategy of management of risk of economic activity of enterprise are substantiated: identification and structuring of risks; analysis of the nature and characteristics of risk factors; assessment of the level of exposure to individual types of risk and determination of the overall level of risk; forecasting of losses of the enterprise as a result of occurrence of risk events by certain types of risks; making strategic decisions on risk management and developing a mechanism for practical implementation of the risk management strategy. A model of the enterprise risk management process with a focus on the strategic component of management with an enhanced control and analytical component and an adaptive component has been developed.

The integration between enterprise risk management and performance management system: managerial analysis and conceptual model to support strategic decision-making process

The integration between Enterprise Risk Management (ERM) and Performance Management System (PMS) has become a crucial process for managing environmental complexity in companies. In this context, in order to contribute to the research field, this paper follows two purposes: (1) to identify the most relevant risk dimensions, and connected risk drivers, perceived in managerial practices; and (2) to provide a suitable way to integrate ERM and PMS in supporting the strategic decision-making process. Based on semi-structured interviews with a total of 75 senior and middle managers from 25 different Italian companies, the authors developed a conceptual model to support the corporate transition to integrate ERM and PMS processes, built on a specific set of Key Risk Indicators (KRIs) that can enable them to achieve economically and environmentally sound performance.

DETERMINANTS OF ENTERPRISE RISK MANAGEMENT (ERM) EFFECTIVENESS

This study examines determinants of enterprise risk management (ERM) effectiveness.Previous studies suggest that find evidence supporting an indirect effect of risk awareness onRM effectiveness. Furthermore, there is a need for an integrated approach to ERM. Based onsurvey data, the reserachers find evidence supporting an indirect effect of risk awareness onRisk Management (RM) Effectiveness. The study supports the use of risk tools strengthens therelationship between risk awareness and RM effectiveness. Moreover, risk awareness has apositive effect on RM through strategy integration, which helps managers to better recognizeand evaluate the risks. There is an indirect effect of risk awareness to ERM through risk tools.This study contributes to management accounting that there is a need of more intensesocialization and understanding to increase risk-conscious behavior in organization. This willlead to important information to determine risk awareness effectives. This study also has itslimitations. First, despite the sample size that relatively small, the sufficient to perform theintended analysis. Second, there may be other characteristics of ERM processes that were notreflected in this study. Future research could explore the aspects of ERM with more specificrespondents, such as those involved in initiating risk management programs and relevantregulators. Another area for future research is more specific factors that determines to thesuccess of an ERM system.

The challenges of implementing enterprise risk management: a study on manufacturing companies in the Tehran Stock Exchange

Implementing enterprise risk management (ERM) is one of the important solutions in reducing the uncertainty and survival of companies. The study aims to explore the challenges of implementing ERM and possible solutions that may address these challenges in the manufacturing companies listed in the Tehran Stock Exchange. In the study, semi-structured interviews with the ERM experts among selected Iranian manufacturing companies are used. The identified challenges related to implementing ERM include intra-organisational and extra-organisational challenges. Intra-organisational challenges include risk governance, risk culture, ERM process, and infrastructures. Besides, extra-organisational challenges include the roles of government and policymakers, political and economic conditions, international restrictions, and the lack of a competitive environment (exclusiveness). Our study found that establishment of a risk committee, strengthening risk culture through ERM training top management commitment to ERM and the provision of sufficient funds were the factors that may be used to mitigated ERM implementation challenges.

The Interrelation of Information Technology Governance and Enterprise Risk Management to The Organization’s Performance: A Review of Empirical Literature

Given that the role of information technology (IT) governance and enterprise risk management (ERM) within the organization are imperative due to the ever-increasing complexity in the corporate environment, this study aims to uncover the relationship between IT governance and ERM along with the impact of the two frameworks’ interconnectedness on the organization’s performance through empirical literature review. Furthermore, the findings obtained from the empirical review are also used to create a checklist that every organization can apply. The purpose of the created checklist is to help organizations examine the interconnectedness of their IT governance and ERM with respect to their needs and objectives. The findings from the empirical review show that both IT governance and ERM emphasize the importance of strategic and process alignment regarding its implementation, and it is positively significant to the organization’s performance. Hence, the level of effectiveness of one’s IT- and risk-oriented approaches are dictated by how well an organization appropriately aligns its IT governance and ERM structure, mechanism, and process with its objectives, needs, and business operations.

Cyber risk management: History and future research directions

AbstractCybersecurity research started in the late 1960s and has continuously evolved under different names such as computer security and information security. This article briefly covers that history but will especially focus on the latest incarnation known as “cyber risk management,” which includes both technical and economic/management dimensions. The main focus of the article is to review research on individual steps of the cyber risk management process and on the overall process to highlight gaps and determine research directions. Two main findings are that cyber risk is difficult to include in the overall enterprise risk management process and that a move toward cyber resilience is necessary to deal with such a complex risk. Both findings require a level of interdisciplinary collaboration that is currently lacking.

The Integration of Balanced Scorecard and ISO 31.000 Based Enterprise Risk Management Process to Mitigate Supply Chain Risk: Case Study at PT Anugerah Bintang Meditama

This study aimed to mitigate supply chain risk through the integration of Balanced Scorecard (BSC) and Enterprise Risk Management (ERM) based ISO 31000 at PT Anugerah Bintang Meditama. The data was obtained through the questionnaires and the interviews with the company's operational managers. The identified supply chain risk consisted of five risk types, namely: supply risk, operational risk, financial risk, demand risk, and environmental risk. The analysis and evaluation results based on risk appetite showed that the priority risks were supply risk, operational risk, financial risks, and environmental risk. Thus, it was important to mitigate these risks to achieve strategic goals and improve company performance.

A literature review of the factors that influence the adoption of an Enterprise Risk Management's process

A literature review of the factors that influence the adoption of an Enterprise Risk Management's process

Enterprise Risk Management: Benefits and Challenges

In this paper, we have provided the introduction to the Enterprise Risk Management (ERM) process by defining ERM, highlighting key keys of an ERM program in an organization, and discussing the COSO and ISO ERM frameworks. Reasons for ERM implementation by firms are also discussed along with the benefits that the organizations gain by integrating their strategic planning with the ERM process. Financial, infrastructure, reputational, and marketplace related benefits are discussed and shown to be leveraged by the firms that implement an effective ERM practice. The key challenges along with their solutions are discussed in this paper where it is shown that ERM practice must be established and implemented keeping best practices in mind so that any unforeseen failures in the future can be avoided. The paper further highlights the important hallmarks of an effective ERM program where nine major points are discussed that came out from a survey addressing the ERM best practices and features. Finally, a case study of the LEGO company is presented.

Enterprise risk management and firm performance: Role of the risk committee

In recent years, there have been increasing efforts in the corporate world to invest in risk management and governance processes. In this paper, we examine the impact of Enterprise Risk Management (ERM) on firm performance by examining whether firm performance is strengthened or weakened by the establishment of a board-level risk committee (BLRC), an important governance mechanism that oversees ERM processes. Based on 260 observations from FTSE350 listed firms in the UK during 2012–2015, we find the effectiveness of ERM significantly and positively affects firm performance. We also find strong BLRC governance complements this relationship and increases the firm performance effects of ERM. Our findings suggest the mere formation of a BLRC is not a panacea for ERM oversight; however, existence of a structurally strong BLRC is crucial for effective ERM governance.

Risk Ownership, ERM Practices, and the Role of the Finance Function

ABSTRACTThis study provides exploratory evidence on the associations between the assignment of senior-level “risk ownership” and the sophistication of the enterprise risk management (ERM) process, ERM sophistication differences in firms with single versus multiple risk owners, and the relationship between CFO risk ownership and Finance's role in the ERM process. Using a global, multi-industry survey, we find ERM sophistication positively associated with broader risk ownership and CFO risk ownership. Finance functions in firms with more sophisticated ERM practices and with CFOs who are risk owners tend to contribute to the identification, monitoring, and management of a broader range of financial, operational, and market risks. Firms with more sophisticated ERM report being better prepared when they encountered major risk events and having stronger competitive positions. However, risk ownership differences are not directly associated with these outcomes after controlling for ERM sophistication.

The Importance of Enterprise Risk Management to Public Sector Organisations in Nigeria

The paper dealt with the importance of enterprise risk management to public sector organisations in Nigeria. The paper has reviewed literature on frameworks for enterprise risk management and established the global practice. The paper found that the practice of enterprise risk management is an evolving practice among public sector organisations globally. In Nigeria, it is mainly practiced in private sector organisations with inadequate levels of implementation in the public sector. The absence of a specific legal framework for the establishment of project and programme management practices in the public sector may be responsible. Based on available frameworks, practices, and benefits of enterprise risk management, the paper has recommended that public sector organisations establish enterprise risk management processes and cadres for project management officer, compliance and risk management officers. Keywords : Enterprise Risk Management, Public Sector, Risk Management, Nigeria DOI : 10.7176/PPAR/9-3-17 Publication date :March 31 st 2019

Proposition of a Shared and Value-Oriented Work Structure for Hospital-Based Health Technology Assessment and Enterprise Risk Management Processes.

Healthcare organizations have invested efforts on hospital-based health technology assessment (HB-HTA) and enterprise risk management (ERM) processes for novel systems to obtain more accurate data on which to base strategic decisions. This study proposes to analyze how HB-HTA and ERM processes can share personal resources and skills to achieve principles with value-oriented results. Literature on ERM and HB-HTA and data from interviews with healthcare managers compose the research data sources, which were submitted to a qualitative data analysis. It was oriented to identify the association between ERM and HB-HTA application in hospitals and the common principles between both processes, in addition to proposing the capability to share personal resources between both teams in a matrix. The common principles and personal background suggested for HB-HTA and ERM teams allowed the build of a matrix identifying how both teams can work in an integrated manner being more effective and value-oriented. The shared resource matrix reports how each professional (with a specific background) may interact with each activity associated to HB-HTA or ERM implementation guidelines. The identification of common principles and capabilities between ERM and HB-HTA suggested advances with the literature from both research areas. The opportunity to share personal resources also contributes to the implementation of those processes in hospitals with less financial resources, approaching its own management to be more efficient with the care chain.

Integration Stages of Project Risk Management (PRM) into Enterprise Risk Management (ERM)

Enterprise risk management (ERM) is a relatively new concept for a project-based organization than for a functional organization. A project-based organization, in general, faces several difficulties in the implementation of ERM due to the diversity of risk associated with several projects. From a system thinking perspective, a project-based organization needs an integrated approach to interrelate the isolated processes of diverse projects. The issues are related to fuzzy picture of integration, such as, the difference between ERM and PRM processes, how to integrate the two concepts, what happens if integration process goes wrong, as well as issues with risk technologies and change in risk culture. The article provides informal and formal approaches to integration of ERM and PRM. Successful integration requires not only an understanding the value of integration, improvement in risk culture, but needs a learning-based approach to improve risk expertise, interaction, team building, and decision making.

Bribery and Corruption: The COSO Framework, FCPA, and U.K. Bribery Act

Long-established major U.S. corporations such as McDonalds, Walmart, and Proctor and Gamble continue to derive a majority of revenues from foreign operations. In addition, a number of relatively new U.S. technology companies such as: Airbnb (2008); Facebook (2004); Snap (2011); Twitter (2006); and Uber (2009), find themselves deep into international markets, often within just a few years of creation, and certainly by the end of their first decade of operation. Increased international commerce results in the potential for greater exposure to global demands for bribery. Bribery and corruption remains a cancer eating away at the ability of nation states to provide for their citizens. Corrupt payments siphons off funds that might otherwise be used to: provide housing; feed the hungry; fight poverty, illness and disease; and educate the masses. The Committee of Sponsoring Organizations of the Treadway Commission (COSO) Enterprise Risk Management (ERM) Framework offers a valuable tool in the anti-fraud struggle and in FCPA and UK Bribery Act compliance. COSO’s 2017 update to the Enterprise Risk Management Integrated Framework addresses developments during recent years in integrating risk with strategy into the ERM process. Our paper proceeds in eight parts. First, we discuss the bribery and corruption problem. Second, a discussion of the Foreign Corrupt Practices Act (FCPA) is presented. Third, we describe the U.K. Bribery Act. Fourth, we discuss the development and evolution of the COSO ERM Framework. Fifth, we apply the COSO ERM Framework as an anti-fraud strategy to assist in compliance with the FCPA and UK Bribery Act. Sixth, we discuss the application of Deferred Prosecution Agreements to the FCPA and their relevance to COSO ERM. Next, we explore the likely changes in FCPA enforcement under the Trump Administration. We believe this paper contributes to the bribery and corruption literature by exploring the potential benefits of the COSO framework.

ERM for Health Care Organizations: An Economic Enterprise Risk Management Innovation Program (E2RMhealth care)

BackgroundIn recent years, health care organizations have looked to enterprise risk management (ERM) for novel systems to obtain more accurate data on which to base risk strategies. ObjectiveThis study proposes a conceptual ERM framework specifically designed for health care organizations. MethodsWe explore how hospitals in the United States and Brazil are structuring and implementing ERM processes within their management structure. This study incorporates interviews with 15 chief risk officers (8 from the United States and 7 from Brazil) with qualitative data analysis using NVivo (QSR International software). ResultsThe interviews confirm that adopting ERM for health care organizations has gained momentum and become a priority, and that the demand for risk economic assessment orientation is common among health care risk managers. ConclusionWe propose an ERM model for health care (Economic Enterprise Risk Management in Health Care) divided into four maturity levels and complemented by an implementation timeline. The model is accompanied by guidelines to orient the gradual implementation of ERM, including orientation to perform risk economic assessment.

Optimal Risk Transfer: A Numerical Optimization Approach

ABSTRACTCapital efficiency and asset/liability management are part of the Enterprise Risk Management Process of any insurance/reinsurance conglomerate and serve as quantitative methods to fulfill the strategic planning within an insurance organization. A considerable amount of work has been done in this ample research field, but invariably one of the last questions is whether or not, numerically, the method is practically implementable, which is our main interest. The numerical issues are dependent on the traits of the optimization problem, and therefore we plan to focus on the optimal reinsurance design, which has been a very dynamic topic in the last decade. The existing literature is focused on finding closed-form solutions that are usually possible when economic, solvency, and other constraints are not included in the model. Including these constraints, the optimal contract can be found only numerically. The efficiency of these methods is extremely good for some well-behaved convex problems, such as Second-Order Conic Problems. Specific numerical solutions are provided to better explain the advantages of appropriate numerical optimization methods chosen to solve various risk transfer problems. The stability issues are also investigated together with a case study performed for an insurance group that aims capital efficiency across the entire organization.

Enterprise Risk Management and Performance of Selected Listed Consumer Goods Companies in Nigeria

Enterprise Risk Management (ERM) is an integrated framework and monitoring tool for managing uncertainties surrounding the business objectives. This study evaluated the relationship between enterprise risk management and performance of Twenty (20) consumer goods companies listed on the Nigerian Stock Exchange. The independent variables used are existence of risk management committee, existence of financial expertise, existence of audit committee, existence of Chief risk officer and board size. The study adopted ex post facto research design and data were sourced from annual reports and accounts of the selected Consumer Goods Companies. The collated data were analysed using descriptive statistics and generalised least square. The results reveal that risk management committee, financial expertise and board size have significant positive effect on performance. The results also revealed that existence of audit committee has a significant negative effect on performance while existence of chief risk officer has no significant effect on performance. The study therefore recommended that the regulatory authorities and other relevant institutions are enjoined to reassess their supervisory role with the view to strengthen the ERM process and taking the issue of risk management seriously at every level of organisations to provide reasonable assurance.