Enterprise Risk Management Research Articles

Risk Management and Service Management Strategies for Car Rental in Improving Vehicle Security Quality for the Company

The shift in tourist interest from initially using transportation services through travel agents to now preferring to rent vehicles themselves has become evident. With the increasing number of consumers requiring car rental services and companies expanding their fleet sizes, it is undeniable that the associated risks also increase each year. Therefore, the purpose of this research is to explore the complex risks to vehicle units in car rental companies in Bali and to determine strategies and steps to improve the security quality of vehicle units in these companies. This study employs a descriptive qualitative method with an enterprise risk management approach, which includes risk identification, risk analysis, risk assessment, risk management, and risk monitoring. The research results, using the likelihood impact matrix technique on five car rental companies in Bali, identified four common risks: operational risk, financial risk, human resources risk, and external risk, with varying levels of risk from low risk, medium risk, to high risk. Strategies for managing these risks include mitigating medium risks and accepting low risks. The policies derived from this study are in the form of risk analysis and risk management strategies for car rental companies in Bali to enhance the security quality of their vehicle units.

Excess goodwill and enterprise litigation risk

Corporate mergers and acquisitions (M&A) are now a common strategic choice for enterprises. As such, goodwill, which is a core asset of M&A activities, is pivotal for financial valuation and accounting. However, the phenomenon of ‘excess goodwill’, resulting from overvaluation due to management overconfidence and performance promises, poses significant risks, including potential financial statement distortions and increased litigation. This study investigates the intrinsic link between excess goodwill and corporate litigation risk by utilising theoretical analyses and empirical tests. By analysing data from A-share listed companies in Shanghai and Shenzhen from 2007 to 2022, we employed the regression residual method to measure excess goodwill and determine its impact on litigation risk through mediating factors such as financing constraints, risk-taking and agency costs. The findings indicate that excess goodwill significantly increases litigation risk, with a more pronounced effect on manufacturing firms and those with low internal control quality. This research provides valuable insights into optimising goodwill accounting treatment and enhancing enterprise risk management practices. The study's implications suggest that stricter internal controls and cautious goodwill valuation practices are essential to mitigate risks, ultimately contributing to the stability of the capital market and the protection of investor interests.

Enterprise Risk Management Implementation and Earnings Quality: An Empirical Investigation on Nigerian Financial Sector

Researches on Enterprise Risk Management (ERM) have gained relevance in accounting and finance literature in recent years, due to more stringent regulations following the global financial crisis. Based on this recent development, this study investigates whether compliance with Enterprise Risk Management implementation impact earnings quality of fifty (50) financial firms in Nigeria. Generalised Method of Moments (GMM) estimator and difference-in-differences analysis were used to test the hypothesis of the study. We also use content analysis method to evaluate the ERM disclosure of the selected financial firms. The results shows that compliance with ERM strategy improves earnings quality and performance. In addition, the result reveals that the implementation of ERM contributes 45.6% increase to earnings quality during the post-ERM period (2019-2023) using the difference-in-differences method. This study contributes to knowledge in accounting and finance literature with respect to ERM research in under-investigated context (Sub-Saharan Africa) with a specific focus on Nigeria.

Board Size, Outside CEO and Financial Performance in Family Companies with Enterprise Risk Management (ERM) as a Moderating Variable

Board Size, Outside CEO and Financial Performance in Family Companies with Enterprise Risk Management (ERM) as a Moderating Variable

Enterprise risk management, corporate governance and insurers risk-taking behaviour in South Africa: evidence from a linear and threshold analysis

PurposeThis study examines the linear and non-linear effects of enterprise risk management (ERM) and corporate governance (CG) on insurers’ risk-taking behaviour.Design/methodology/approachThe study employed panel data of 63 insurers from South Africa over the period 2015 and 2019. The study used the generalised method of moments (GMM) to determine the direct relationship, while the dynamic panel threshold technique was utilised to discover whether there is non-linearity in the relationship and the threshold level at which ERM and CG stimulate insurance risk-taking.FindingsThe result from the GMM elicits a positive relationship between ERM and risk-taking, implying that insurers with a robust ERM system are more likely to pursue higher risks. The empirical evidence also suggests that board size and board independence improve insurers’ risk-taking. Contrarily, gender diversity shows an inverse relationship with risk-taking. The dynamic panel threshold regression confirms non-linearities between ERM, CG and risk-taking. The empirical evidence indicates a U-shaped relationship between ERM and risk-taking, implying that a robust ERM system increases insurers’ risk-taking and vice-versa. Further, board size and independence reveal an inverted U-shaped relationship, suggesting that larger boards and a higher proportion of independent directors exhibit lower risk-taking. However, gender diversity presents a negative relationship, demonstrating a strong impact at higher threshold levels. This tells that the presence of females on the board reduces insurers’ risk-taking preferences.Practical implicationsDue to the risk-bearing nature of the insurance business, it is required that they ensure a robust ERM system for prudent risk-taking decisions. This demands strict adherence to ERM principles and allocating sufficient resources for effective implementation. Also, there is a need for strong CG structures that pay more attention to diversity when selecting board members due to their influence in ensuring improved risk-taking choices.Originality/valueThis study contributes to the existing literature by providing insights into the under-researched role of ERM and CG in insurers’ risk-taking behaviour. The study further extends the literature by providing evidence on the non-linearity and threshold levels at which ERM and CG influence insurers’ risk-taking choices. The findings are unique and contribute to the growing body of literature documenting the need for strong ERM and CG systems in insurance companies.

Agricultural Drought-Triggering for Anticipatory Action in Papua New Guinea

Throughout its history, Papua New Guinea (PNG) has faced recurrent agricultural droughts, imposing considerable strain on both livelihoods and the economy. Particularly severe droughts have been associated with El Niño climate patterns. During these episodes, PNG becomes especially vulnerable to extended periods of aridity and diminished precipitation. Historically, humanitarian assistance for these events has primarily focused on responding to emergencies after an agricultural drought has been declared and communities have already been impacted. Here, we developed a proactive agricultural drought-triggering method for anticipatory action (AA) in PNG to offer a more sustainable and cost-effective approach to address this hazard. Our AA uses weather forecasts and risk data to identify and implement mitigative actions before a disaster occurs. The research details a step-by-step guide from early warning to action implemented by the Food and Agricultural Organization of the United Nations and the Government of Papua New Guinea. This preemptive disaster risk management initiative integrates a combined drought index (CDI) with specific thresholds and tailored anticipatory actions based on crop calendars. Moreover, the developed CDI provides a 3-month lead time for implementing AA to reduce the impact of the agricultural drought. During the El Niño-induced drought event that began in 2023, the CDI was tested and the AA was piloted for the first time.

Asset risk assessment and management of large-scale electricity enterprises under the concept of financial sharing

The power grid is an important industry that is crucial to national security and economic development, and its importance in society continues to grow. As an emerging concept, financial sharing enables internal resource sharing and optimization, thereby improving the efficiency and effectiveness of asset management. This study investigates and analyzes the current situation of asset management in large-scale electricity enterprises in X Province, China, and proposes a comprehensive asset management strategy optimization plan based on the concept of financial sharing. The proposed plan integrates management models such as PDCA and designs an entire information management architecture to enhance resource utilization efficiency, reduce environmental pollution risks, and optimize asset allocation and operational decisions. In addition, it also utilizes the status of assets to assess the risks associated with fixed assets in the power grid. The results indicate that the asset risk assessment method under the concept of financial sharing can reduce power grid asset losses, effectively enhance the competitiveness and sustainable development capabilities of electricity enterprises.

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.

Corporate Sustainability Performance: The Role of the Gender Diversity of the Board and Enterprise Risk Management

The research objective is to investigate the impact of board gender diversity on corporate sustainability performance, with enterprise risk management (ERM) as a moderating factor within health sector companies listed on the Indonesia Stock Exchange. The study adopts a secondary quantitative research approach and utilizes panel data linear regression analysis conducted through Econometric Views (E-Views). The study population consists of health sector firms listed on the Indonesia Stock Exchange from 2019 to 2022. The sample selection method used is purposive sampling, resulting in a sample size of 10 companies for the study. Secondary data is collected through the documentation method from the Indonesia Stock Exchange and the official websites of the selected companies. The findings reveal a negative relationship between board gender diversity and corporate sustainability performance, with a negative coefficient indicating that higher gender diversity among board members correlates with lower sustainability performance. Additionally, the study demonstrates that ERM strengthens the association between gender diversity and sustainability performance. Companies proficient in ERM implementation are better positioned to leverage the positive effects of gender diversity on sustainability performance. Understanding this interplay can assist organizations in making informed decisions regarding gender diversity policies and enterprise risk management strategies.

The Effect of Enterprise Risk Management, Firm Size, Profitability, Leverage, and Managerial Ownership on Firm Value

The phenomenon of a Tobin's q value of less than 1 indicates a decrease in firm value. Knowing the effect of ERM (Enterprise Risk Management), firm size as proxied by ln (total assets), profitability as proxied by return on assets, leverage as proxied by debt to equity ratio, and managerial ownership on firm value by Tobin's q in conventional commercial banks listed on the IDX in 2017-2022 is the aim of the study. Quantitative methods used in this study and data analysis using SPSS 26. The number of samples is 84 data. Firm value impacted simultaneous by ERM, firm size, profitability, leverage, managerial ownership. In the partial test, firm value have no impacted by ERM and managerial ownership, the firm value has a significant negative impacted by firm size, while the firm value show results that have a significant positive impacted by profitability and leverage variables. Other variables can be added in further study such as bank health calculation ratios, including non-performing loans, so that you can get a regression model with high value.

A Risky Proposition: Setting Objectives and Assessing Business Environment Risks Using the Enterprise Risk Management Framework

ABSTRACT In the first part of this case, students are introduced to the five components of the 2017 COSO enterprise risk management (ERM) Framework and will use this framework to recommend objectives related to a small coffee shop’s strategic position and identify the associated risks. In the second part of the case, students will use Social, Technological, Economic, Environmental, Political, Legal, and Ethical (STEEPLE) Analysis to identify business environment risks and assess these risks regarding a new business opportunity. At the conclusion of the case, students should be able to recommend risk-conscious business objectives and performance targets that align with a business’s strategy as well as assess the risk associated with a new business opportunity. The topics addressed in this teaching case are appropriate for undergraduate and graduate-level managerial accounting, Accounting Information Systems (AIS), and Auditing courses where business environment risks are discussed and evaluated. Data Availability: Data are available upon request. JEL Classifications: M140; M410.

Analisis Kinerja Keuangan pada Koperasi Usaha Warga Pupuk Kujang Periode 2018-2022

This research analyzes the financial performance of the Koperasi Usaha Warga Pupuk Kujang Cikampek during 2018–2022, focusing on financial ratios such as liquidity, solvency, profitability, and activity. Using a quantitative descriptive approach, the study employs annual financial data to identify trends and factors influencing performance. Findings reveal significant fluctuations in the cooperative's financial ratios over the examined period. While liquidity ratios fluctuate, solvency ratios show improvement over time, indicating efficient debt management and asset utilization. However, profitability ratios exhibit a declining trend, emphasizing the need for measures to enhance revenue generation and cost management. Meanwhile, activity ratios depict gradual improvement, indicating enhanced operational efficiency. The implications suggest the importance of careful monitoring, risk management, and strategic initiatives to ensure sustainable growth and financial stability for Koperasi Usaha Warga Pupuk Kujang Cikampek.

Barriers to the implementation of enterprise risk management in Indian construction firms

Barriers to the implementation of enterprise risk management in Indian construction firms

Analysis of the Impact of Enterprise Risk Management (ERM) on the Project Success through PRM Process: Focused on the Overseas Construction Projects

Analysis of the Impact of Enterprise Risk Management (ERM) on the Project Success through PRM Process: Focused on the Overseas Construction Projects

THE CONCEPT OF RISK MANAGEMENT: AN INTEGRATED ANALYSIS BASED ON THE CRITERIA OF THE FINANCIAL CONDITION OF ENTERPRISES

The article is a theoretical and methodological study of risks as an important concept of enterprise management, highlighting the methodology of comprehensive risk analysis based on the criteria of the enterprise's financial condition. The essence and tasks of enterprise risk management and the place and role of analysis as a priority, all-encompassing functional component are highlighted. Analysis and assessment of the level of risks in statics and dynamics, using the integral function of the financial state of a multidimensional dynamic object, makes it possible to track the zones of unacceptable risk in the development of the enterprise. The calculation of the integrated assessment of the impact of risks on financial stability is carried out with the help of definitions of the outlined financial coefficients that characterize the potential of the financial state, the deviation from the normative and calculated values of which characterizes a certain level of risks of economic entities. The quantitative assessment of risks and the calculation of the comprehensive assessment were carried out according to groups of financial condition criteria - financial stability, liquidity, business activity, and profitability. Deviation from the normative value indicates the risk of disruption of the efficiency and financial stability of the enterprise under the influence of a number of factors of direct and indirect action. Determining the integrated assessment of risks for the researched period made it possible to follow the dynamics, identify the risks of enterprises and draw a conclusion about changes in their comprehensive assessments for all groups of criteria that are in the critical risk zone. The applied methodology allows for the development of measures and reasonable management decisions, which are taken in the short and long term to preserve the financial stability and efficiency of the enterprise. It is important to predict the prevention of risks to financial and economic efficiency and financial condition.

What’s Wrong with Enterprise Risk Management?

Enterprise risk management (ERM) was introduced in the 1990s and has since become expected by boards of directors and regulators as a sign of good management and good corporate governance. However, many organizations struggle to implement ERM, and still seek practical advice on ERM implementation. This article explains many of the reasons why organizations are unsuccessful in their efforts at implementation and provides practical solutions provided by an experienced risk manager and consultant, an ex-Chief Risk Officer, and an academic, all of whom have written extensively on the subject. This article should be of interest to practitioners involved in implementing ERM, to consultants in ERM, and to academics teaching courses on ERM, risk management, and related topics. This article also provides a base against which further future research can be performed as ERM best practices continue to evolve.

The Application of Hedging in Enterprise Risk Management: The Case Study of Southwest Airlines

In today's project of globalization and increasing market uncertainty, enterprise risk management has become one of the key factors for the survival and development of enterprises. As an important risk management tool, hedging is widely used in corporate practice. This article takes Southwest Airlines as an example to explore the application of hedging in enterprise risk management. Through a case study of Southwest Airlines, we aim to uncover how hedging can help companies reduce risk, stabilize operations, and improve profitability. At the same time, this paper also hopes to provide useful inspiration and reference for enterprise risk management.

The application of healthcare failure mode and effect analysis in reducing medication errors in the emergency department of Regional Public Hospital

Introduction: Medication or medication error is an essential issue in the world of health, both in the world and in Indonesia. The emergency department is a health service unit that provides emergency services 24 hours non-stop, which is very likely for medication errors to occur. Most medication incident errors can be prevented. One method that can be used is of healthcare failure mode and effect analysis (HFMEA). Applying HFMEA in hospitals helps avoid and identify possible or potential problems or errors in healthcare services. Methods: This qualitative study used the HFMEA approach to conduct risk analysis regarding medication events and errors in the emergency department (ER), at Regional Public Hospital, Central Java. Brainstorming and focus group discussion were conducted with all members of the HFMEA team at the regional public hospitals’ ER in Central Java following HFMEA guidelines. Results: Four process flows in ER drug or medication administration services were identified, encompassing 14 service sub-processes and 57 failure modes. Of the 57 failure modes, only 34 were subjected to hazard analysis, and only 24 failure modes required control measures. From these data, four control strategies were obtained. Conclusion: This study found 24 failure modes need to be addressed and suggested four control strategies, including enterprise risk management formats according to the needs of ER’ health workers, improving ER service management, improving standard operational procedures for medical services, and improving pharmacy management.

BIBLIOMETRIC STUDY OF FINANCIAL LITERACY AND RISK TOLERANCE ON INVESTMENT DECISIONS

This study aims to analyze trends and developments in research on the relationship between financial literacy, risk tolerance, and investment decisions. Employing a bibliometric analysis methodology, the study utilizes data from international publications in the Google Scholar database collected through Publish or Perish software. The analysis covers the publication period from 2017 to 2022 and includes a review of 498 articles using keywords such as financial literacy, risk tolerance, and investment decisions. VOSviewer software was employed for data analysis. The analysis reveals increased attention to topics such as risk appetite, financial markets, and performance, despite a declining trend in publications on financial literacy, risk tolerance, and investment decisions. Significant gaps in the literature are identified, particularly in areas such as financial risk tolerance, financial education, enterprise risk management, and investment horizon. Future research should focus on these underexplored areas to develop personalized investment strategies and enhance financial education. Recommendations include the creation of targeted financial education programs and tools to improve the assessment of risk tolerance. This study provides valuable insights into the evolving landscape of financial literacy and risk tolerance research. It underscores the importance of these factors in making informed investment decisions and offers a foundation for future studies to build upon.

A proposed framework for defining the relationship between complexity, project categorization, and project risk management: Case study of a medical company in Morocco

Recent financial crises have highlighted the utmost importance of implementing risk management practices, as exemplified by the profound repercussions of the COVID-19 pandemic. Moreover, we witnessed the rise of various initiatives within the medical sector, specifically in the fields of biomedicine, hospitals, and pharmaceuticals, across Africa, with a notable emphasis on Morocco. The government in Morocco has implemented measures to foster investment and encourage participation from companies and stakeholders. Taking into account an indeterminate and volatile future, it becomes imperative for organizations to establish robust risk management strategies to navigate successfully through these uncertainties. This research paper concentrates on the convergence of complexity, project categorization, and risks. We propose a novel approach to the implementation of the Risk Management Process, utilizing the Enterprise Risk Management framework. By establishing Risk Management rules within the context of a “complex” project, we observed enhanced performance and improved risk management through the holistic consideration of interdependencies rather than treating them as separate entities. Additionally, to substantiate this interdependency, we conducted a comparative analysis of the project's risk and complexity between 2020 and 2022.