Enterprise Risk Research Articles

ESG and Corporate Financial Performance with Enterprise Risk as Mediator and COVID-19 as Moderator

ESG and Corporate Financial Performance with Enterprise Risk as Mediator and COVID-19 as Moderator

Методика управління кадровими ризиками підприємства

This article analyzes the essence of personnel risks of enterprises and develops a methodology for managing them. The methodology for managing personnel risks of an enterprise primarily involves identifying the risk and identifying its components. It also includes various aspects of the process of managing personnel and the enterprise as a whole, the key elements of which are: personnel risk factors; indicators of personnel risks; probable losses or gains; methods of personnel risk management; budgeting; Implementation deadlines. It is noted that the development of methods for managing personnel risks begins only when the critical point of the onset of negative consequences of the implementation of personnel risks in the functioning of the enterprise is reached, which entail serious problems. The main methods of managing personnel risks of an enterprise have been identified, which include preventive and reactive methods. The preventative method is to eliminate personnel risks before they reach the crisis stage. The reactive method is aimed at eliminating the negative consequences of personnel risks. Both methods should be used in the process of managing personnel risks of an enterprise. The proposed system of methods for managing personnel risks of an enterprise, built on the main stages of the personnel management process, allows us to formulate a number of recommendations in order to neutralize the impact of personnel risks, namely: recruitment, selection and selection of personnel, adaptation of personnel to working conditions at the enterprise; employee assessment and certification; personnel training and development; dismissal of workers. It has been proven that managing personnel risks requires the use of a set of measures to eliminate them. For this purpose, it is advisable to use risk transfer methods through outstaffing, outsourcing or personnel leasing. It is indicated that the management of personnel risks of an enterprise is closely related to the goals and objectives of the strategic development of the enterprise; personnel management system; personal assessment of employees and continuous identification and monitoring of the performance of enterprise personnel. Based on the results of the study, the main directions for minimizing the impact of personnel risks of the enterprise were identified, and the main methods for avoiding them were proposed.

Enterprise financial sharing and risk identification model combining recurrent neural networks with transformer model supported by blockchain

The objective of this study is to investigate methodologies concerning enterprise financial sharing and risk identification to mitigate concerns associated with the sharing and safeguarding of financial data. Initially, the analysis examines security vulnerabilities inherent in conventional financial information sharing practices. Subsequently, blockchain technology is introduced to transition various entity nodes within centralized enterprise financial networks into a decentralized blockchain framework, culminating in the formulation of a blockchain-based model for enterprise financial data sharing. Concurrently, the study integrates the Bi-directional Long Short-Term Memory (BiLSTM) algorithm with the transformer model, presenting an enterprise financial risk identification model referred to as the BiLSTM-fused transformer model. This model amalgamates multimodal sequence modeling with comprehensive understanding of both textual and visual data. It stratifies financial values into levels 1 to 5, where level 1 signifies the most favorable financial condition, followed by relatively good (level 2), average (level 3), high risk (level 4), and severe risk (level 5). Subsequent to model construction, experimental analysis is conducted, revealing that, in comparison to the Byzantine Fault Tolerance (BFT) algorithm mechanism, the proposed model achieves a throughput exceeding 80 with a node count of 146. Both data message leakage and average packet loss rates remain below 10 %. Moreover, when juxtaposed with the recurrent neural networks (RNNs) algorithm, this model demonstrates a risk identification accuracy surpassing 94 %, an AUC value exceeding 0.95, and a reduction in the time required for risk identification by approximately 10 s. Consequently, this study facilitates the more precise and efficient identification of potential risks, thereby furnishing crucial support for enterprise risk management and strategic decision-making endeavors.

Enterprise’s Risks and Their Management under Current Economic Conditions

At the current stage, an increasing number of economic entities are exposed to various risks, both internal and external. The operating conditions for enterprises in recent years have changed significantly compared to previous years due to multiple causes: political, social, global, etc., which have created unpredictable or at least difficult-to-anticipate conditions, forcing entrepreneurs to seek new markets, new ways of operating, new business partners, or even to reprofile their activities. The issue of studying and managing enterprise risks is important because it allows them to take certain measures to prevent, limit, or avoid risk. In many cases, risks enable enterprises to understand their vulnerabilities and strengths, and the timely identification of risks for economic agents aiming to make a profit allows for more efficient operations.

Unlocking Firm Value Indonesia's Intellectual Capital Triumphs, Risk Management Falters

This study examines the impact of Intellectual Capital Disclosure (ICD) and Enterprise Risk Management Disclosure (ERMD) on the value of mining companies listed on the Indonesia Stock Exchange (IDX) from 2017 to 2021, with financial performance as an intervening variable. Using purposive sampling, data from 12 companies were analyzed with SPSS 26. The results show that ICD positively affects both firm value and financial performance, while ERMD negatively impacts both. Financial performance enhances firm value but does not mediate the ICD-firm value relationship; it does mediate the ERMD-firm value relationship. These findings highlight the importance of ICD for improving firm performance and value, suggesting areas for future research to extend the study period and include more variables. Highlight: ICD Impact: ICD significantly boosts firm value and financial performance. ERMD Effect: ERMD negatively influences firm value and financial performance. Financial Mediation: Financial performance mediates ERMD-firm value but not ICD-firm value. Keywoard: Intellectual Capital Disclosure, Enterprise Risk Management, Financial Performance, Firm Value, Mining Companies

Концептуальные вопросы создания систем управления рисками промышленных предприятий

The article reveals the fundamental issues of creating risk management systems for industrial enterprises and provides a brief description of the main approaches to identifying risks and related goals and assessment methods. The aim of the study is to summarize modern foreign theoretical approaches to the creation of enterprise risk management system. Using the method of bibliographic analysis, an overview of modern main conceptual foreign approaches to understanding enterprise risks and risk management is given. The interrelation between risk reduction (elimination) activities and the types of risks undertaken is elucidated. Various applications of risk management systems within companies are presented, along with examples of the most common risk management systems employed by industrial enterprises and a synthesis of the experience in applying the most effective risk management methods. The conclusion emphasizes the necessity of meticulous risk identification and analysis in building corporate risk management systems. Moreover, the presented examples of successful risk management systems serve as valuable benchmarks for industry practitioners seeking to enhance their risk mitigation capabilities. Moving forward, continued research and refinement of risk management methodologies are essential for adapting to evolving business landscapes and ensuring the resilience of industrial enterprises in the face of uncertainty. Ultimately, proactive risk identification and analysis remain pivotal in fostering a culture of risk-awareness and resilience within organizational frameworks.

Innovation management in the context of the Fourth Industrial Revolution: challenges and opportunities for management

This scientific article examines the impact of the Fourth Industrial Revolution (Industry 4.0) on innovation management. The potential challenges and opportunities faced by managers in modern business are considered. In the context of technological changes affecting the business environment and the economy, it is possible to track how the development of innovative technologies affects business processes. Based on this analysis, conclusions can be drawn about the need for adaptation and response in the principles of the organization. The article analyzes the concepts of Industry 4.0 (digitalization and automation of production processes, the introduction of artificial intelligence) as significant factors affecting management activities, corporate culture and the introduction of innovative technologies.The concept of the fourth industrial Revolution is becoming the basis for structural challenges and technological risks for enterprises in various industries. This paper discusses the issue of rethinking the corporate structure, the nuances of introducing innovative technologies into production and management, as well as changes in product requirements on the part of a potential consumer. Based on this analysis, conclusions and recommendations have been formed for managers on the implementation of Industry 4.0 tools, their adaptation and integration into current business processes.

Analysis of Huawei's Financial Risk Management from the Perspective of Financial Indicators

With the continuous development of China's socio-economy, overall enterprise growth faces certain limitations; deeper economic reforms and market opening create a more challenging external environment for businesses. This implies that companies will encounter more challenges. To ensure that enterprises can operate normally and successfully achieve their business objectives, it is necessary to correctly understand financial risks and adopt rational risk management methods to avoid or reduce potential losses. This paper takes Huawei Technologies Co., Ltd. (hereinafter referred to as "Huawei") as an example and analyzes its financial indicators. Through financial data, it identifies the issues and causes of the company's financial risk management, and discusses how to prevent financial risks in enterprises, aiming to assist companies in achieving sustainable development in a fiercely competitive environment.

Impact of ERM and Capital Structure on Firm Value in Indonesia

This study examines the impact of enterprise risk management (ERM) and capital structure on firm value, with firm age and size as moderating factors, using data from 47 banking companies listed on the Indonesian Stock Exchange (2019-2021). Utilizing quantitative methods and Moderate Regression Analysis with SPSS, the results indicate that ERM does not affect firm value, while capital structure has a positive effect. Firm age weakens the impact of ERM but strengthens the effect of capital structure on firm value. Conversely, firm size enhances the impact of ERM but weakens the effect of capital structure. These insights are crucial for investors in the banking sector. Highlight: ERM does not significantly impact firm value. Capital structure positively influences firm value. Firm age and size moderate these effects. Keyword: enterprise risk management, capital structure, firm value, firm age, firm size

The role of managerial ownership, independent commissioners, and corporate social responsibility, moderated by enterprise risk management, on company value in the pharmaceutical industry listed on the Indonesia Stock Exchange (IDX) from 2018 to 2022

This study aims to investigate the influence of Managerial Ownership, Independent Commissioners, and Corporate Social Responsibility, both partially and collectively, with Enterprise Risk Management moderation on Company Value. Company value is measured using Tobins'q method. The research was conducted in the Pharmaceutical Industry listed on the Indonesia Stock Exchange (IDX) for the period 2018-2022. The research method used is quantitative. The population of the study consisted of 11 companies. Samples were determined using purposive sampling technique, obtaining samples from 10 companies with 5 years of observation, resulting in 50 samples. Hypothesis testing analysis was conducted using Moderated Regression Analysis (MRA) with SPSS 25.0 software for Windows. The results of the study indicate that: 1) Managerial Ownership has a negative and non-significant partial effect on Company Value, 2) Independent Commissioners have a positive but non-significant partial effect on Company Value, 3) Corporate Social Responsibility has a positive and significant partial effect on Company Value, 4) Enterprise Risk Management moderates positively but non-significantly the effect of Managerial Ownership on Company Value, 5) Enterprise Risk Management moderates positively and significantly the effect of Independent Commissioners on Company Value, 6) Enterprise Risk Management moderates positively and significantly the effect of Corporate Social Responsibility on Company Value, 7) Managerial Ownership, Independent Commissioners, Corporate Social Responsibility together with Enterprise Risk Management moderation have a significant effect on Company Value.

Perception-Dominant Control Types for Human/Machine Systems

We explore a novel approach to complex domain modelling by emphasising primitives based on perception. The usual approach either focuses on actors or cognition associated with tokens that convey information. In related research, we have examined using effects and/or outcomes as primitives, and influences as the generator of those outcomes via categoric functors. That approach (influences, effects) has advantages: it leverages what is known and supports the expanded logics we use, where we want to anticipate and engineer possible futures. But it has weaknesses when placed in a dynamic human-machine system where what is perceived or assumed matters more than what is known. The work reported here builds on previous advances in type specification and reasoning to ‘move the primitives forward’ more toward situation encounter and away from situation understanding. The goal is in the context of shared human-machine systems where: • reaction times are shorter than the traditional ingestion/comprehension/response loop can support; • situations that are too complex or dynamic for current comprehension by any means; • there simply is insufficient knowledge about governing situations for the comprehension model to support action; and/or, • the many machine/human and system/system interfaces that are incapable of conveying the needed insights; that is, the communication channels choke the information or influence flows. While the approach is motivated by the above unfriendly conditions, we expect significant benefits. We will explore these but engineer toward a federated decision paradigm where decisions by local human, machine or synthesis are not whole-situation-aware, but that collectively ‘swarm’ locally across the larger system to be more effective, ‘wiser’ than a convention paradigm may produce. The supposed implementation strategy will be through extending an existing ‘playbooks as code’ project whose goals are to advise on local action by modelling and gaming complex system dynamics. A sponsoring context is ‘grey zone’ competition that avoids armed conflict, but that can segue to a mixed system course of action advisory. The general context is a costly ‘blue swan’ risk in large commercial and government enterprises. The method will focus on patterns and relationships in synthetic categories used to model type transitions within topological models of system influence. One may say this is applied intuitionistic type theory, following mechanisms generally described by synthetic differential geometry. In this context, the motivating supposition of this study is that information-carrying influence channels are best modelled in our challenging domain as perceived types rather than understood types.

NEXUS BETWEEN ENTERPRISE RISK MANAGEMENT PRACTICES AND BUSINESS PERFORMANCE METRICS: EVIDENCE FROM SELECTED PHARMACEUTICAL COMPANIES IN LAGOS STATE, NIGERIA

Enterprise risk management practices are key instrument for enhancing the business performance metrics of any business entity, especially pharmaceutical firms. This study examined the nexus between enterprise risk management techniques and business performance metrics (financial perspectives, customers’ perspectives, internal business process, and learning and growth perspectives) among selected pharmaceutical companies in Lagos State. The study adopted a cross-sectional survey design cum double sampling techniques comprising purposive and convenience. The study further employed a structured questionnaire to gather data from a sample size of one hundred and sixty-four (164) participants. For descriptive statistic, simple regression technique was adopted in the data analysis. The study revealed the positively low relationship between enterprise risk management practices and business performance metrics of selected pharmaceutical companies in Lagos State, Nigeria. The study recommended that pharmaceutical companies should develop ERM framework that would provide a systematic method for detecting, evaluating, controlling, and overseeing risks. Furthermore, it is crucial to foster a culture of risk consciousness inside these organisations, wherein senior executives exhibit their dedication to risk management as an integral aspect of the business ethos. These officials should promote cooperation and transparent communication with different departments and external stakeholders, such as regulators, customers, and suppliers, to aggressively tackle risks.

Understanding the significance of risk management in enterprise management dynamics

In the complex landscape of modern business, risk management is a critical factor in deciding whether organizations succeed or fail. This review delves into the significance of risk management in enterprise dynamics, exploring its evolution, conceptual framework and the categories of risks organizations face. The study emphasizes the importance of risk identification, assessment, response and continuous monitoring. Additionally, it categorizes enterprise risks, including financial, operational, strategic, compliance and reputational risks. This work highlights the pivotal role of risk management in strategic decision-making, stakeholder confidence, operational resilience, value creation, and innovation, as well as cost reduction. Furthermore, it investigates the emergence of Enterprise Risk Management (ERM) and its integration with management science. Empirical findings underscore the positive impact of ERM on organizational risk evaluation and management. The study concludes with thoughts on the objectives of ERM, risk assessment, group impacts, preference consistency, risk management frameworks and potential implementation obstacles that organizations may encounter. The integration of ERM with strategic management is emphasized, providing a comprehensive understanding of organizational dynamics and promoting long-term success.

Tracer Gas Method Evaluation for Assessing the Energy Potential of Biogas from Chicken Farms in the Canary Islands

Biodigestion in farming and agriculture offers environmental and economic benefits, but investing in biodigesters carries real-world risks for enterprises. This study analyzes methane (CH4) emissions from a poultry farm biodigester in Tenerife Island, Canary Islands, Spain, conceptualized as a right-angled prism measuring 45 m wide, 25 m long, and 12 m tall, with an internal volume of approximately 13,500 m3. Using a Neon tracer gas technique, CH4 emission rates were quantified in situ during two surveys in February 2021 and October 2022, capturing seasonal variability in ambient conditions. Biogas analysis was performed using a portable micro-gas chromatograph in less than 5 min, revealing stable CH4 production rates of approximately 200 kg·d−1 (~310 m3·d−1) and 330 kg·d−1 (~500 m3·d−1) for the two experiments, respectively. The composition of biogas indicated CH4 concentrations of around 38–43%, with the remaining composition consisting of carbon dioxide (19–26%), nitrogen (36–27%), oxygen (7–4%), and trace amounts of other gases. A comparison with a theoretical model showed a good correlation. This approach enhances biodigester investment attractiveness by enabling enterprises to optimize efficiency promptly. The obtained data were used to estimate the energy potential of biogas from chicken farms in the Canary Islands.

Impact of an improved random forest-based financial management model on the effectiveness of corporate sustainability decisions

With the development of the economy, more and more electronic manufacturing enterprises are emerging like mushrooms after rain. These enterprises, while developing, also face financial risks caused by various reasons. In order to provide early warning for financial risks of enterprises, improve the accuracy of identifying financial risks, avoid financial crises, and provide assistance for sustainable development decisions, this paper proposes a financial management model based on modified random forest. In order to improve the generalization ability of financial management models, pruning methods were adopted in the study to avoid overfitting. Synthetic minority oversampling technique is used to optimize the financial management model and reduce the calculation deviation of the model through its sampling ability. At the same time, the prediction index system is proposed to improve the analysis ability of the financial management model. The results show that the accuracy and recall rate of the improved algorithm based on random forest proposed in this study in identifying corporate financial distress are 98.03 % and 100 % respectively. The importance value of operating income and cash flow in enterprise indicators is 0.391, which is the most relevant indicator for enterprise financial forecasting. The results show that after the improvement of synthetic minority oversampling technique, the stochastic forest model can effectively improve the recognition and early warning ability of enterprises’ financial distress, and is conducive to maintaining good operating efficiency and sustainable operation of enterprises. Electronic manufacturing enterprises need to strengthen their attention to cash flow, improve their cash flow, and enhance their profitability. The financial management model designed by the research institute can provide technical and information support for financial early warning and sustainable development of electronic manufacturing enterprises.

The impact of digital transformation on firm performance: a perspective from enterprise risk management

The impact of digital transformation on firm performance: a perspective from enterprise risk management

Can Fintech mitigate business risks?--Evidence from the Chinese market

Fintech is an important supplement to the traditional financial system, and its development is a good medicine to alleviate the financing constraints and business risks of enterprises. Based on the data of listed enterprises from 2004 to 2021, this paper adopts the method of panel linear regression to explore the impact of the level of Fintech development on the operating difficulties of local enterprises. The results show that increasing the level of Fintech development can effectively reduce the business risks faced by enterprises, and the conclusion still holds after a series of robustness tests such as adding control variables, replacing explanatory variables, multiple fixed effects, and changing the time interval. The mechanism analysis shows that the level of Fintech will affect the business risk of enterprises by changing the book-to-market ratio, and the heterogeneity analysis shows that the impact of Fintech on the business risk of private enterprises as well as non-Big 4 audited enterprises is more significant. The policy implication of this paper is that the government should actively guide, support and regulate the development of Fintech in different regions to provide policy support and guarantee for enterprises to reduce their business risks. However, attention should also be paid to balancing the relationship between innovation and risk management, data security and privacy protection to ensure the sustainable development of Fintech.

THE IMPACT OF USING INTERNAL CONTROL UNDER THE ELECTRONIC OPERATING SYSTEM

Internal control tools constitute one of the modern frameworks approved by the Committee of Sponsoring Organizations (COSO). "And the one which takes into account setting the objectives first, then estimating the possibility of those objectives being exposed to threats, then internal control procedures are designed that reduce the risks, and at the same time provide reasonable guarantees for achieving the organization's objectives and introducing all modern developments into the system. The contemporary trend of internal control focuses on the integration between managing the risks to which the organization is exposed and the internal control frameworks (Enterprise Risk Management- Integrated Framework) and its abbreviation (ERM), which provides the organization Management in conditions of uncertainty related to risks and their probabilities to be able to create and preserve value. The continuous developments in internal control systems, on the one hand, and competition between economic units, on the other hand, have led to many challenges through the use of modern technology and the innovation of new methods of development, which required the development of all sub-systems of control, including internal control systems, and then review the internal control structure and the extent of its acceptance of this computer-based technology and the effectiveness of its devices in providing information that supports the system's ability to adopt it. Based on this, the research topic was divided into five sections. The first section dealt with the research methodology, the second section dealt with the theoretical framework of the internal control system, and the third section dealt with the problems and limits of using electronic computers. The fourth section was devoted to studying the impact of using computers. The electronic section focuses on the components of the internal control system, while the fifth section is dedicated to stating the most important conclusions and recommendations.

The Practice of Enterprise Risk Management and Sustainable Performance in Jordan

The primary objective of any organization is to minimize risks and losses while optimizing values, revenues and returns. Therefore, risk management, which is often referred to as risk identification, likelihood of occurrence, and impact on the business, is essential. Recent corporate catastrophes have brought to light how inadequately corporations handle risks. In reaction to these challenges, organizations have shifted from separate and personalized procedures to a more comprehensive and integrated enterprise risk management (ERM) perspective in their risk management strategies. To address these new global sustainable challenges which include hunger, poverty, high unemployment, climate change, and related issues, businesses should place a strong priority on environmental preservation and social responsibility. Jordan is one of the countries dealing with several issues related to sustainability. The sustainable performance of Jordanian firms deserves further attention. Managers in Jordanian industrial businesses must keep a close eye on how the company's environmental environment is being improved to reduce air pollution, the usage of hazardous materials, and other difficulties. Therefore, companies in Jordan must adopt strategies that will allow them to face this issue to improve their social, environmental, and economic performance. Jordan's manufacturing and service industries should be at the forefront of a comprehensive approach to risk management and board monitoring, given the growing concerns regarding the environment, society, and economy. Since ERM is a relatively new concept, its implementation in Jordanian industrial and service companies is still in its early stages. Moreover, there is a lack of comprehensive research regarding the ERM in Jordan.

Moderating role of enterprise risk management in the relationship between sustainability performance and a firm’s competitive advantage

The emergence of sustainable business practices has garnered interest among stakeholders. However, the question of whether sustainability performance provides companies with a competitive advantage is still being debated in the literature. This paper aims to examine the influence of sustainability performance – namely economic sustainability performance and environmental, social, governance (ESG) – on competitive advantage, with the effectiveness of enterprise risk management (ERM) as the moderating variable. This paper used 202 firm-year observations during 2015–2022 from non-financial sector companies listed on the Indonesia Stock Exchange. To test the hypotheses, panel data regression with a one-year time-lag analysis is conducted. The findings show that economic sustainability performance has no relationship with competitive advantage, while ESG has a positive effect. Furthermore, ERM effectiveness strengthens the effect of economic sustainability and ESG on competitive advantage. Further investigation used a two-year time-lag analysis for a long-term perspective. The analysis shows that economic sustainability performance and ESG have a positive impact on competitive advantage. In contrast, ERM effectiveness has no effect on the relationship between economic sustainability performance and competitive advantage. Moreover, additional analysis incorporates the effect of COVID-19 into the main model and shows that the pandemic did not affect competitive advantage; this is consistent with the main results. The findings encourage companies to improve their risk management and sustainability initiatives. The government may also take it into account when developing rules that promote the implementation of sustainable development. AcknowledgmentThis research was supported by the Ministry of Education, Culture, Research, and Technology of the Republic of Indonesia through the Center for Higher Education Fund (BPPT) and Indonesia Endowment Funds for Education (LPDP) for providing the Indonesian Education Scholarship (BPI-Beasiswa Pendidikan Indonesia).