Enterprise Risk Management Research Research Articles

Enterprise Risk Management as Part of the Organizational Control Package: Review and Implications for Management Accounting Research

ABSTRACT Research on enterprise risk management (ERM) has increased considerably in the past two decades. Although management accounting researchers have substantially contributed to these advancements, previous reviews of the ERM literature have not discussed in depth the role of ERM as part of the organizational control package and how management accounting research could build on its research traditions to further our collective understanding of ERM. In this paper, we therefore adopt a management control perspective to critically analyze both quantitative and qualitative empirical ERM research and specifically focus on the integration of ERM in organizational control packages. Taking a complementarity perspective and accounting for the decision-facilitating and decision-influencing purposes of management accounting and control systems (MACS), we recommend several broader avenues for future management accounting research on ERM.

Enterprise risk management literature: emerging themes and future directions

PurposeThis study aims to identify the publication phase, performance and scientific contributions of research papers related to enterprise risk management (ERM) and to visualise the emerging themes in addressing volatility, uncertainty, complexity and ambiguity (VUCA).Design/methodology/approachThe biblioshiny technique based on the bibliometrix R package was used to draw journal papers’ performance and scientific contributions by displaying distinctive features from the bibliometric method used in prior studies. The data was extracted from the Web of Science (WOS) and Scopus databases.FindingsSince the 1990s, ERM publication has gained momentum, and it is generally categorised into four main themes. Studies by Miller (1992) and Bromiley et al. (2015) scored the highest in global and local citations, respectively. However, the Economic Outlook ranked first in quality of publications while the Journal of Risk and Insurance topped in quantity of publications. Collaborative research mainly exists between two authors, and the dynamic number of collaborative networks is evident in the USA.Research limitations/implicationsThis study is limited by the filtered keywords used to generate the search on journal papers’ in WOS and Scopus. It is imperative to have more comprehensive and rigorous analytics on ERM research to enable a direction for future research. Finally, ERM implementation better equips firms to mitigate risk in a VUCA environment.Originality/valueThis study attempts to fill a vacuum of ERM literature, specifically in business economics, in addressing VUCA. Moreover, it covers a comprehensive predetermined period of from its inception in 1983 until 2022.

Enterprise risk management: A bibliometric analysis of research Trends

A bibliometric study of 510 enterprise risk management (ERM) papers from the Web of Science Core Collection (WOS-CC) database from 2004 to 2023 is presented in this article. The study's main goal was to give a bibliometric overview of ERM research, focusing on annual publications, references, journals, authors, author affiliations, and nations. Each article's author, document type, publication year, source, volume, edition, pages, number of citations, and references were obtained from WOS in BibTex format. To help the research, Biblioshiny evaluated this data. The survey indicated that ERM research has increased fast over the previous two decades, with a consistent upward trend and increasing pace in the past five years. "What's wrong with risk matrices?" by Cox, LA (2008) was the most cited publication in this topic, and the Journal of Risk and Financial Management was the most influential journal. David L. Olson of the University of Nebraska Lincoln was the most prolific author, and UNL was the premier research institution in this area, according to the survey. ERM research was heavily influenced by the US and several other countries. To further ERM research, the paper recommends international collaboration. More research can refine the identification of ERM research hotspots and emerging trends, according to the report.

Benefits of Enterprise Risk Management: A Systematic Review of Literature

Objective: In an enhanced climate of risk complexities, the firm's stakeholders desire a risk management framework that promises the benefits of efficiencies, transparencies, and solutions for interrelated risks. Enterprise risk management (ERM) is widely seen as a suitable instrument to address these issues. However, not all are convinced of ERM's benefits. This necessitates a review of extant literature and collating it to generate interrelated insights. This paper reviews articles on ERM from the management and finance domain and catalogs the benefits of ERM. Methodology/Technique: This paper reviews 129 articles addressing ERM benefits. It examines the academic disciplines of journals publishing ERM studies by looking into their H Indices, SJR scores, and ABDC rankings to assess ERM's impact and acceptability among scholars. The research articles are analyzed for their subject domains, geographic scope, and methodology used in exploring the relationship between ERM adoption and its benefits to the firm. Collating and reviewing these articles enables the mitigation of data gaps. These studies were primarily from accounting, finance, management, corporate governance, and strategy domains. Findings: Improved cost-effectiveness, earnings stability, increased profitability, improved decision making, better risk communication, competitive advantage, better resource allocation, enhanced firm value, and performance are the key benefits of ERM adoption identified in this study. A knowledge gap is presented around assessing ERM benefits and extending ERM research scope to developing countries like India. Novelty: The study catalogs the benefits of ERM and makes a strong case for ERM adoption among firms. Type of Paper: Review JEL Classification: M10, M14, G30, G32 Keywords: Enterprise risk management (ERM); firm value; firm performance; ERM benefits; Covid19 Reference to this paper should be made as follows: Naik, S; Prasad, Ch.V.V.S.N.V. (2021). Benefits of Enterprise Risk Management: A Systematic Review of Literature, Journal of Finance and Banking Review, 5 (4): 28 – 35. https://doi.org/10.35609/jfbr.2021.5.4(3)

Benefits of Enterprise Risk Management: A Systematic Review of Literature

In an enhanced risk climate, the firm's stakeholders desire a risk management framework that promises benefits of efficiencies, transparencies, and solutions for interrelated risks. This calls for a deepening and widening of insights into risk management. Enterprise risk management (ERM) is widely seen as a suitable instrument to address these issues. ERM challenges the traditional silos style approach to risk management. The core notion of ERM is to adopt a portfolio approach to managing risks. ERM seeks to create a 360-degree system of monitoring risks by actively engaging all personnel and facilitating coordination and communication among all departments within the firm. ERM promises to lower the firm's total risk by building resilience against systematic failures and monitoring growth opportunities. It aims to optimize performance and consequently increase the firm's value and longevity. Most definitions note ERM as a process conceived in consultation with the board of management, management, and other personnel to manage the firm's risk within its appetite. Studies from (Beasley, Pagach, & Warr, 2008; Hansen & Andersen, 2014; Hoyt & Liebenberg, 2011) confirms roles in value creation, risk reduction, performance enhancement, and strategic decision making. However, not all are convinced of ERM's benefits and performance. Researchers have criticized ERM as a management fad and noted that the research is centric to only the financial sector. Studies from (Arena, Arnaboldi, & Palermo, 2017; Bromiley, McShane, Nair, & Rustambekov, 2015) have found mixed to no evidence of ERM's role in delivering benefits to the firm. The criticism has only sharpened post-2007 when several firms claiming high standards of 'holistic' risk management failed in the face of the global financial crisis. Besides, researchers have also pointed out endogeneity issues with ERM research. This necessitates a review of extant literature and collating it to generate interrelated insights. Collating and reviewing these articles enables the mitigation of data gaps and provide directions for future research. Keywords: Enterprise risk management (ERM), firm value, firm performance, ERM benefits, COVID19

The Factors Influencing The Enterprise Risk Management Practices and Firm Performance in Jordan and Malaysia

Future of uncertainty and risks in firm businesses and country-based economics remains continuous processes that need to be managed effectively and efficiently. Risks taking is a routine activity in all firms. Enterprise Risk Management (ERM) has now become an ultimate concern and a robust risk management approach in all financial and non-financial industries and other sectors throughout the globe. Firms are adopting ERM as a holistic strategy by putting its core components in practice to effectively manage all risks to protect the organizations and stakeholder value. The process of putting ERM into practice is only effective and efficient through identifying the factors that influence its practice in order to improve the firm performance. As a result of this reason, various factors influencing ERM were examined by different investigators as an indirect factor or as a parameter. However, only a few scholars studied it as a major factor or main objective, despite the risks remain a major issue influencing the goals of enterprises in all firm types in both Jordan and Malaysia. In order to fully consolidate the influencing factors on ERM practices, a comparative review of the available literature in Jordan and Malaysia were carried out to excavate the key influencing factors for direct identification in order to improve the firm performance. The factors identified were categorized into three groups; the management-based, firm-based, and ERM-performance-measurement-based factors. Each group of factors was found to influence the success of ERM strategies and practices in both Jordan and Malaysia. Jordan (Middle-East) and Malaysia (South-East Asia) shared a common characteristic of ERM adoptions and practices with regard to firm composition and risk management. Both countries are now pacing up to meet up with ERM practice challenges. Although, ERM still is a relatively new concept in several parts of Middle-East and South-East Asia. Though, Malaysia proved to have more improved and established ERM success factors and researches as compared to Jordan. Additionally, Malaysia was found to have more appeared ERM terms in the Board of Bursa Malaysia (BBM) Guidelines as well as ERM practices under different sectors from 2008 to 2018 compared to Jordanian Amman Stock Exchange (ASE). Thus, it appears that Malaysia has more robust ERM research works, adoptions, practices, and compliance system in place compared to what is obtainable in Jordan. In conclusion, firm managers in Jordan and Malaysia are highly recommended to use these ERM factors identified as strategic and to improve ERM practices in their organizations.

Risk management in facility management for data centres: status and deficits

PurposeData centres (DC) serve as critical infrastructure and require a sustainable and uninterrupted building operation. Effective risk management (RM), as a component of enterprise RM (ERM), is the basis for secure DC operations. The purpose of this paper is to determine, whether holistic and integrated RM solutions already exist or what they might look like.Design/methodology/approachA literature review of laws, norms, standards, methods and certifications combined with transcribed paper and pencil expert interviews with DC, facility service companies and consulting firms has been conducted. The study also investigates RM practices of 23 large international DC and facility service companies.FindingsResults of literature research and intensive interviews with experienced DC experts, covering the entire life cycle of buildings, indicate that there are no holistic and integrated RM practice applications for DC on a sound academic basis.Practical implicationsFindings suggest that there is a need for developing a holistic and integrated RM framework for DC. This paper is a contribution to the expansion of ERM research and can be very valuable for builders and operators. The results of this research form the basis for the development of a structured RM framework for DC that improves performance.Originality/valueThe study allows professionals to understand the operational state-of-the-art of RM in critical environments and shed light on the wide spectrum of conceptualities and definitions.

Enterprise risk management: history and a design science proposal

PurposeThis paper aims to investigate the evolution of enterprise risk management (ERM) out of fragmented disciplinary perspectives to provide a foundation for promoting interdisciplinary research and proposes a design science approach for more effective ERM implementation in organizations.Design/methodology/approachThis conceptual paper synthesizes ERM research and practice from multiple disciplines.FindingsCorporate risk management concepts were born in academic finance and developed further in the finance subset known as risk management and insurance. With the advent of ERM, efforts must broaden beyond applying statistical models to quantifiable risks. Other disciplines have expanded ERM research by embracing techniques to investigate risk management practices to produce knowledge that integrates practice and theory. ERM is promoted as integrated risk management, yet silos still remain in both practice and research.Originality/valueThis study provides a foundation and a proposal for moving ERM past academic and organizational silos, which is necessary to achieve the ERM philosophy and increase organizational resilience. Understanding the evolution and fragmented nature of ERM research and practice provides a foundation for interdisciplinary cooperation necessary to achieve the holistic ERM philosophy. A next frontier is effective ERM implementation. This paper argues for an organizational design science approach for mitigating the resistance to change that confounds effective implementation of ERM in organizations facing an increasingly uncertain environment and outlines future research for applying the approach to implementing the ISO 31000 risk management process.

Does Enterprise risk management enhance operating performance?

The Committee of Sponsoring Organizations (COSO) Enterprise Risk Management (ERM) framework (COSO-ERM) indicates that the development of an enterprise-wide risk assessment and management process is designed to “provide reasonable assurance regarding the achievement of entity objectives.” We examine this issue and hypothesize that firms with mature ERM processes should achieve greater operational performance than those with less mature risk management processes. This study relies on internal audit function management survey responses matched with archival firm level data to gain a better understanding of the expected operating performance impact of the multi-stage ERM implementation process. After controlling for board governance and other known effects, we find that firms with higher levels of ERM process maturity are characterized by higher operating performance than their industry peers utilizing performance metrics closely related to the earnings process. Our study provides support for the linkage of enhanced operating performance associated with the maturity of ERM processes and suggests other potential areas of ERM research.

Research Insights About Risk Governance

In recent years, expectations for increased risk governance have been placed explicitly on boards of directors. In response, boards are being held responsible for not only understanding and approving management’s risk management processes, but they are also being held responsible for assessing the risks identified by those processes as part of overseeing management’s pursuit of value. These increasing responsibilities have led a number of organizations to adopt enterprise risk management (ERM) as a holistic approach to risk management that extends beyond traditional silo-based risk management techniques. As boards, often through their audit committee, consider management’s implementation of ERM as part of the board’s risk oversight, a number of questions emerge that can be informed by academic research related to ERM. This article summarizes findings from ERM research to provide insights related to the board’s risk governance responsibilities. We also identify a number of research questions that warrant further analysis by governance scholars. It is our hope that this article will spawn varying types of research about ERM and corporate governance.

Benefits of Formal ERM Implementation and the Role of Risk Awareness (WITHDRAWN)

As the most critical aspect of risk culture, risk awareness is increasingly seen as informal driver in a firm’s risk management system influencing results and contributing to a firm’s strategic advantage. This study examines the mediation effect of risk awareness on the relationship between formal enterprise risk management (ERM) implementation and company performance. The investigation is based on survey data from 121 non-financial companies in Austria. Hence, I contribute to strategic ERM research by addressing the role of risk awareness in a formal ERM system and explore its benefits. Results support a positive association of formal ERM implementation and company performance and a mediation effect of risk awareness. Furthermore, respondents occupying a controller position but being responsible for the company’s overall risk management process have a more conservative perception of a firm’s performance.

Enterprise Risk Management: Review, Critique, and Research Directions

© 2014 Elsevier Ltd. Many regulators, rating agencies, executives and academics have advocated a new approach to risk management: Enterprise Risk Management (ERM). ERM proposes the integrated management of all the risks an organization faces, which inherently requires alignment of risk management with corporate governance and strategy. Academic research on ERM is still in its infancy, with articles largely in accounting and finance journals but rarely in management journals. We argue that ERM offers an important new research domain for management scholars. A critical review of ERM research allows us to identify limitations and gaps that management scholars are best equipped to address. This paper not only identifies how management scholars can contribute to ERM research, but also points out why ERM research (and practice) needs management research for its development.

Enterprise Risk Management: Review, Critique, and Research Directions

Many regulators, rating agencies, executives, and academics have responded to recent corporate scandals and business failures by advocating and embracing a new approach to risk management: enterprise risk management (ERM). ERM proposes the integrated management of all the risks an organization faces, which inherently requires alignment of risk management with corporate governance and strategy. Academic research on ERM is still in its infancy with articles largely in accounting and finance journals, but rarely in management journals. We argue that ERM offers an important new domain of research for management scholars. A critical review of ERM research allows us to identify limitations and gaps that management scholars are best equipped to address. The paper not only identifies how management scholars can contribute to ERM research, but also points out why ERM research (and practice) needs management research for its development.