Risk Management Practices Research Articles

Real-time financial monitoring systems: Enhancing risk management through continuous oversight

The rapid evolution of financial technology has introduced complex risks that challenge traditional risk management frameworks, necessitating innovative solutions. This review paper aims to examine and synthesize existing research on real-time financial monitoring systems that use advanced AI and ML technologies to enhance risk management through continuous oversight. The focus includes traditional financial institutions and fintech companies across various regions to address disparities in risk management capabilities. The reviewed studies span five years, from 2018 to 2023, incorporating transactional records, compliance reports, and stakeholder surveys, providing a comprehensive informational and statistical basis. Using a mixed-methods approach that includes qualitative interviews and quantitative data analysis, the literature confirms that real-time monitoring systems significantly improve risk detection accuracy and operational efficiency. Specifically, the studies show a reduction in fraud incidents by 35% and an improvement in credit risk assessment accuracy by 25%. These findings indicate enhanced predictive capabilities and faster response times to emerging threats. The conclusions drawn are relevant for financial institutions, regulators, and policymakers aiming to improve risk management practices and compliance standards. The potential for further application includes broader adoption of real-time systems across the financial sector, ensuring enhanced stability and security in the face of evolving digital threats.

Predicting stock market crashes with machine learning: A review and methodological proposal

This review paper examines the utilisation of machine learning techniques for predicting stock market crashes. It surveys existing methodologies, identifies common trends, and analyses strengths and weaknesses. A novel methodological framework is proposed, integrating ensemble learning, alternative data sources, and model interpretability to address limitations in current approaches. The proposed framework aims to enhance predictive accuracy, transparency, and actionable insights in financial forecasting. Future research directions include empirical validation, interdisciplinary collaboration, and the integration of emerging technologies. Continued research in leveraging machine learning for financial forecasting is vital for advancing risk management practices and fostering resilient financial systems.

Evaluating the Efficacy of Risk Management Practices and Their Necessity for Enhancing the Profitability of Financial Institutions in Sri Lanka

Evaluating the Efficacy of Risk Management Practices and Their Necessity for Enhancing the Profitability of Financial Institutions in Sri Lanka

The Risk Assessment of Banks and Financial Institutions

This thesis investigates the profound impacts of the COVID-19 pandemic on the banking sector, focusing on how the crisis has reshaped risk management and operational strategies. It begins by contextualizing the pandemic's effects within the broader historical challenges faced by the banking industry, drawing parallels with past financial crises to outline the uniqueness of the current situation. Through a detailed analysis of operational, credit, and market risks, this study reveals how banks have responded to the increased volatility and the shift in consumer behaviors towards digital banking solutions. The research adopts a mixed-method approach, combining quantitative data from financial reports with qualitative insights from industry experts to provide a comprehensive overview of the pandemic's impact. Key findings suggest that the crisis has catalyzed significant changes in risk management practices, with banks rapidly adopting technological innovations to enhance resilience and operational efficiency. The conclusion posits that the ongoing challenges require banks to evolve, advocating for a proactive approach to risk management and a strategic embrace of digital transformation. This thesis contributes to the academic literature by providing empirical evidence of the pandemic's impacts and offers practical recommendations for banks and policymakers to mitigate future crises effectively.

The Impact of Internal Audit Effectiveness, Risk Management Practices, and Organizational Culture on Financial Performance

The Impact of Internal Audit Effectiveness, Risk Management Practices, and Organizational Culture on Financial Performance

Design phase collaborative risk management factors: a case study of a green rating system in South Africa

PurposeWe explore the design risk factors and associated managerial practices driving collaborative risk management for design efficacy in green building projects. By illuminating project design risk as an important project risk category in its own right, the study contributes to our understanding of optimising design efficacies for collaborative project risk management.Design/methodology/approachThe study comprises exploratory interviews conducted with 27 industry project practitioners involved in the design and delivery/implementation of Green Star-certified building projects in South Africa.FindingsThe findings discursively highlight seven sources of design risk. We also identify seven specific collaborative risk management practices for design efficacy emerging from a consideration of how risk environments vary in the Green Star-certified projects, each with its own project design risk implications.Originality/valueThe study advances our understanding of how collaborations emerging from particular relational yet context-specific practices can be optimised to strengthen project risk management.

Risk Management Practices and the Performance of Indonesian and Malaysian Islamic Banks: Does Digitalization Mediate This Nexus?

ABSTRACTDespite being exceptionally regulated financial institutions, risk management practices (RMPs) of Islamic banking (IBs) have always remained under the limelight due to their impact on financial performance (FP) and the influence of digitalization (DT). This study aims to investigate the impact of RMPs on FP through the mediating effect of DT. To analyze the linkage between these constructs, we created an index for RMPs, five unique proxies (mobile [MB_DEA], big data [BD_DEA], Internet of Things [IoT], cloud computing [CC_DEA], and social media [SM_DEA]) of DT, and Tobin's Q as a proxy of FP and operationalized the theory of contingency. The data between 2009 and 2020 was collected from Indonesian and Malaysian IBs and was analyzed using the two‐step generalized method of moments (GMMs) technique. The empirical findings represent that RMPs and DT have a significant positive effect on FP. Simultaneously, RMPs have a significant positive effect on two proxies of DT (MB_DEA and SM_DEA), and an insignificant positive effect on the remaining three proxies of DT (BD_DEA, IoT_DEA, and CC_DEA). Simultaneously, DT as a mediator plays a significant role between RMPs and FP. This study contributes to systematizing the RMPs of IBs by integrating digitalization which eventually will increase the financial portfolios of IBs.

Optimizing risk management in oil and gas trading: A comprehensive analysis

The oil and gas trading sector is inherently volatile, influenced by geopolitical events, market dynamics, and regulatory changes. Effective risk management is crucial for mitigating these uncertainties and ensuring operational stability and profitability. This paper presents a comprehensive analysis of optimizing risk management in oil and gas trading, highlighting strategies, tools, and best practices to manage and mitigate risks. Risk management in oil and gas trading encompasses a broad spectrum of activities, including market risk, credit risk, operational risk, and compliance risk. To optimize risk management, firms must employ a multifaceted approach that integrates advanced analytics, robust risk assessment frameworks, and strategic decision-making processes. Key strategies include the use of financial instruments such as futures, options, and swaps to hedge against price volatility. These instruments enable traders to lock in prices and margins, thereby reducing exposure to market fluctuations. Advanced analytics and data-driven decision-making are essential components of effective risk management. By leveraging big data, machine learning, and artificial intelligence, traders can gain deeper insights into market trends, forecast price movements, and identify potential risks. Predictive analytics allows for proactive risk management, enabling firms to anticipate and respond to market changes swiftly. A comprehensive risk assessment framework is also critical. This involves regular monitoring and evaluation of risk exposure, stress testing, and scenario analysis. Such practices help identify vulnerabilities and ensure that risk mitigation measures are in place. Additionally, fostering a risk-aware culture within the organization is vital. This includes training and educating employees on risk management practices and encouraging transparent communication and reporting of risks. Compliance risk, driven by regulatory changes, is another significant aspect of risk management in oil and gas trading. Staying abreast of regulatory developments and ensuring compliance with international and local regulations is essential to avoid legal penalties and reputational damage. Implementing robust compliance programs and leveraging technology to monitor regulatory changes can help firms stay compliant. In conclusion, optimizing risk management in oil and gas trading requires a holistic approach that combines financial hedging, advanced analytics, comprehensive risk assessment, and compliance management. By adopting these strategies, firms can effectively mitigate risks, enhance decision-making, and achieve sustainable growth in a highly volatile industry. Keywords: Optimizing, Risk Management, Oil and Gas, Trading, Analysis.

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.

Tinjauan Literatur Manajemen Risiko Cyber dalam Proyek: Identifikasi, Evaluasi, dan Mitigasi Ancaman

In today's digital era, business projects are increasingly vulnerable to cyber threats, which can result in significant financial and reputational losses. This journal discusses an effective cyber risk management approach for projects, encompassing the identification, evaluation, and mitigation of digital threats. The objective is to provide an overview of risk management in projects. This journal explains how to identify risks by thoroughly analyzing various potential cyber threats, such as malware, phishing, and DDoS attacks that could impact the project. Subsequently, risk evaluation is conducted by assessing the vulnerability and potential impact of each identified threat, using a literature review method. The literature review includes the analysis of data obtained from relevant articles and books on the topic. The final stage involves risk mitigation, which includes developing strategies to reduce or eliminate the impact of threats, such as implementing security controls, providing employee education and training, and developing incident response plans. This study emphasizes the importance of a proactive and holistic approach to cyber risk management to ensure the success and sustainability of projects. The journal aims to provide an overview of risk management in projects, demonstrating that the integration of comprehensive cyber risk management practices can significantly enhance the resilience of projects against digital threats.

Towards Diagnosing and Mitigating Behavioral Cyber Risks

A company’s cyber defenses are based on a secure infrastructure and risk-aware behavior by employees. With rising cyber threats and normative training efforts showing limited impact, raising cyber risk awareness is emerging as a challenging effort. The review of the extant literature on awareness diagnosis shows interdisciplinary but mainly theoretical approaches to understanding attitudes and influencing risk behavior. We propose and test a novel methodology to combine and operationalize two tools, deep metaphor interviews and the IDEA risk communication model, to apply them for the first time in the context of behavioral cyber vulnerabilities. The results show a link between diagnosed attitudes and effective risk behavior in a real-life organizational setting, indicating the potential for an expanded diagnostic effort. We propose to develop a broader diagnostic and intervention set to improve cyber awareness and a toolkit to support the business practice of cyber risk management.

Cryptocurrency and Its Role in Portfolio Diversification

Purpose: This study sought to explore cryptocurrency and its role in portfolio diversification. Methodology: The study adopted a desktop research methodology. Desk research refers to secondary data or that which can be collected without fieldwork. Desk research is basically involved in collecting data from existing resources hence it is often considered a low cost technique as compared to field research, as the main cost is involved in executive’s time, telephone charges and directories. Thus, the study relied on already published studies, reports and statistics. This secondary data was easily accessed through the online journals and library. Findings: The findings reveal that there exists a contextual and methodological gap relating to cryptocurrency and its role in portfolio diversification. Preliminary empirical review revealed that incorporating cryptocurrencies into investment portfolios offered promising diversification benefits due to their low correlation with traditional assets, despite their high volatility and regulatory uncertainties. It highlighted the significant risk management challenges posed by cryptocurrencies' extreme price fluctuations and the evolving regulatory landscape. The study emphasized the importance of careful, limited allocation to cryptocurrencies, robust risk management practices, and continuous market monitoring. Ultimately, it suggested that cryptocurrencies could enhance portfolio performance when strategically used alongside traditional diversification methods. Unique Contribution to Theory, Practice and Policy: The Modern Portfolio Theory, Efficient Market Hypothesis and Behavioural Finance Theory may be used to anchor future studies on portfolio diversification. The study recommended a cautious yet strategic inclusion of cryptocurrencies in investment portfolios to enhance diversification, emphasizing the importance of ongoing research, robust risk management, and proactive monitoring due to their high volatility and regulatory uncertainties. It called for clear and consistent regulatory frameworks to protect investors while fostering market growth, and highlighted the need for collaboration between academia, industry, and regulatory bodies to improve financial literacy and market stability. These recommendations aimed to contribute to theoretical, practical, and policy aspects of cryptocurrency investments.

LEVERAGING ARTIFICIAL INTELLIGENCE (AI) IN PUBLIC SECTOR FINANCIAL RISK MANAGEMENT: INNOVATIONS, CHALLENGES, AND FUTURE DIRECTIONS

This paper examines the transformative role of Artificial Intelligence (AI) in enhancing financial risk management practices within the public sector in different context. With the increasing complexity of financial markets and the growing demand for transparency and efficiency in public finance management, traditional methods of risk identification and mitigation are proving to be inadequate. AI and machine learning technologies offer a promising alternative, with their ability to process vast amounts of data, recognize patterns, and predict future trends with a high degree of accuracy. We delve into the application of predictive models for identifying various financial risks, including credit, market, liquidity, and operational risks, and explore how AI algorithms can optimize decision-making processes through scenario analysis, resource allocation, and policy impact analysis. The paper also addresses the challenges associated with integrating AI into public financial management systems, such as data privacy concerns, the need for skilled personnel, and the importance of developing regulatory frameworks that ensure ethical use and transparency. By presenting case studies and real-world applications, this study highlights both the successes and failures of AI implementations in the public sector, providing valuable lessons learned and best practices. As AI technologies continue to evolve, this paper underscores the need for ongoing research and adaptation to fully realize their potential in making public sector financial risk management more proactive, efficient, and resilient.

Strengthening Fintech Security in Uganda: An Analysis of Insider Threats and Effective Risk Management Strategies

Purpose: The purpose of this study is to analyze security policies and risk management practices for reducing insider threats in the Fintech industry in Uganda. The study aims to classify and identify insider threats, examine how they relate to risk management procedures, and offer practical recommendations for improving Fintech companies’ security measures. Methodology: The study adopted a descriptive research design, focusing on diverse respondents across various sectors. Data was collected through surveys from 25 respondents, including IT security specialists, accountants, finance officers, and other relevant roles. The sectors represented included Banking and Finance (52%), Security (12%), Information Technology and Telecommunications (8% each), and others such as Agriculture, Civil Society, and Public Service (each 4%). The study employed both qualitative and quantitative data collection methods, with secondary data reviewed from existing literature and case studies. Statistical analysis was conducted using SPSS to interpret the data and identify trends in insider threat occurrences and risk management practices. Findings: The study revealed that insider threats in Uganda's Fintech sector can manifest in both physical and cyber forms. The predominant risk management practices identified include proactive measures such as robust security policies, access controls utilized by 88% of respondents, security awareness training by 80%, and continuous monitoring by 68%. Incident response and reporting procedures were also critical, ensuring that breaches are swiftly addressed to minimize impact. There was a significant positive correlation (r = .65; p < 0.05) between the frequency of past insider attacks and the regularity of risk assessments, underscoring the importance of regular evaluations in mitigating risks. Unique Contribution to Theory, Practice and Policy: The study contributes to the theoretical understanding of how local cultural attitudes and regulatory frameworks impact effectiveness of risk management strategies, providing insights that can inform RMF adaptations in similar contexts. For practitioners, it recommends development and implementation of robust security policies, employee training programs, and advanced monitoring systems. Policy-makers are advised to support regulatory frameworks that mandate regular risk assessments and the adoption of best Fintech practices.

Risk culture and employee performance for optimal organizational success: the mediating role of employee satisfaction and employee engagement

PurposeThis paper aims to investigate the impact of risk culture on employee performance by exploring the mediating roles of employee satisfaction and employee engagement in the relationship between risk culture and employee performance.Design/methodology/approachThe study employed partial least squares-based structural equation modeling (PLS-SEM) to assess both the direct effects and mediation effects, using a sample of 311 employees from the banking and insurance sectors. In contrast to PLS-SEM, a fuzzy set qualitative comparative analysis (fsQCA) technique was also applied to discern the causal configurations that lead to improved employee performance.FindingsThe findings revealed a significant direct effect of risk culture on employee performance, employee satisfaction and employee engagement. The findings also revealed that employee satisfaction significantly mediated the relationship between risk culture and employee performance, whereas the mediating role of employee engagement is partially significant. The fsQCA findings illustrated that a diverse combination of risk culture dimensions, employee satisfaction and employee engagement can result in enhanced employee performance.Practical implicationsThis study provides important implications for the banking and insurance industries, suggesting that organizations should prioritize the development of a strong risk culture to improve employee-related outcomes such as performance, satisfaction and engagement, which are key factors for achieving optimal organizational success.Originality/valueThe paper specifically highlights the importance of integrating risk culture into human resource management, providing valuable insights for organizations seeking to enhance their risk management practices and culture.

NAVIGATING FINANCIAL DECISIONS: A COMPREHENSIVE REVIEW OF THEORIES, BEHAVIOURS, AND INNOVATIONS

This literature review synthesizes seminal and contemporary research on financial decision-making, emphasizing theoretical frameworks and empirical findings. Fama's (1970) Efficient Market Hypothesis sets the foundation for understanding market behavior, while Kahneman and Tversky's (1979) Prospect Theory introduces psychological influences, highlighting biases such as loss aversion (Tversky & Kahneman, 1991). Jensen and Meckling (1976) provide insights into agency theory, exploring the implications of managerial behavior on firm performance. The influence of gender on investment strategies is examined by Barber and Odean (2001), illustrating the role of overconfidence. Additionally, the impact of social interactions on financial choices is explored by Bursztyn et al. (2014). Financial literacy, addressed by Lusardi and Mitchell (2014), underscores the importance of informed decision-making in personal finance. The review also highlights the integration of behavioral insights in corporate finance, particularly in capital structure decisions (Myers, 1984) and risk management practices (Hull, 2012). Overall, the collected works illustrate a rich tapestry of factors influencing financial decisions, blending economic theory with behavioral insights, and emphasizing the necessity for ongoing research in this dynamic field. KEYWORDS: Financial Decision-Making, Behavioral Finance, Prospect Theory, Market Efficiency, Agency Theory, Overconfidence, Financial Literacy, Risk Management, Capital Structure and Social Interactions.

Typologising the corporatisation of parent roles in the ‘modern’ governance of Multi-Academy Trusts (MATs) in subordinated communities

ABSTRACT This article develops and explores a typology illuminating the types of parent roles in the governance of Multi-Academy Trusts in the corporatised field of school governance and leadership. Policy has positioned parents as objects of managerialist and corporatised practice. This article draws on data generated through observations and interviews with corporate actors and parents from three multi-academy trusts. Such a typology seeks to describe and illuminate how policy and practice entanglements have constructed parent role types as supporters, providers, monitors, local civic knowledge experts, mediators and partners. Thinking with Bourdieu’s concepts of field and capital, I explore how these types support the governance of trusts in the delivery of public accountabilities and management of risk. I make two contributions. Firstly, I provide a typology that can be used to describe and illuminate parent role types constructed in a corporatised field. Secondly, by exploring the typology through the corporatised practices of accountability and risk management, parents are revealed as enablers and products of corporate activity, with role types positioned hierarchically in the field, in dominated positions. This study challenges the homogenisation of the consumer parent relationship with governance as these types are constructed as products and enablers in corporate activity.

‘They must know their rights’– reflecting on privacy, informed consent and the digital agency of asylum seekers and refugees in border contexts

AbstractThe article questions digital agency as a subjective experience of refugees when crossing Europe's external and internal borders. More concretely, the article asks how refugees experience digital agency, and how this concrete experience is constituted in specific border practices. In doing so, it examines the contradictions that arise between European laws and human rights in the context of border practices. The analysis of the data of this paper reflects two important components of digital agency: the sense of ownership and control of one's body and actions, and the capacity to think independently and thus make considered choices. This study is based on a qualitative research approach based on narrative interviews. The data was imported to MAXQDA, a software package that allows data to be efficiently collected, organised, analysed and visualised electronically. The article shows how refugees and asylum seekers, when crossing the border to Europe, do not simply enter another country, but a (powerful) institutional system. In having their biometric and digital data collected, they are confronted with several practices of border and risk management that have become routinised and thus ‘normalised’ on an institutional level. Thus, their digital agency must be understood as precarious, underscored by an installed coercive environment.

Strategies for Integrated Audits to Ensure Control, Risk Management, and Ethical Practices

The purpose of this study is to examine the role of integrated audits in organizational governance and ethical practices. Through a systematic literature review, the research design entails identifying relevant academic journals, industry reports, and scholarly publications related to integrated audits, organizational governance, and audit effectiveness. The selected literature will be critically evaluated to identify key themes, trends, and theoretical frameworks, with thematic analysis used to uncover recurring patterns. The findings reveal that integrated audits play a pivotal role in fortifying organizational resilience, promoting sustainable business practices, and enhancing stakeholder trust. From a strategic management perspective, integrated audits provide valuable insights for decision-making and resource allocation, while ethically, they foster a culture of accountability and transparency. The integration of emerging technologies such as artificial intelligence and blockchain further enhances audit effectiveness. The implications of this research underscore the need for organizations to embrace integrated audits as a strategic imperative for enhancing governance, risk management, and ethical practices. This study contributes to the advancement of knowledge in the field of integrated audits and informs organizational practices in navigating the complexities of the modern business landscape.

Financial Performance Analysis of Bank Aceh's During the Covid-19: RGEC Approaches

The Covid-19 pandemic has had a significant impact on various sectors in Indonesia, including the banking industry. This study aims to compare the financial performance of PT Bank Aceh Syariah before and during the Covid-19 pandemic using the RGEC (Risk Profile, Good Corporate Governance, Earnings, Capital) analysis method. Secondary data used in this research were obtained from the financial statements of Bank Aceh Syariah published on the bank's official website. Data analysis was conducted using the independent sample t-test hypothesis testing. The results indicate that there were no significant differences in the ratios of Non-Performing Financing (NPF), Financing to Deposit Ratio (FDR), Good Corporate Governance (GCG), Return on Assets (ROA), Return on Equity (ROE), Operating Expenses to Operating Income (BOPO), and Capital Adequacy Ratio (CAR) between the periods before and during the Covid-19 pandemic. These findings suggest that Bank Aceh Syariah has been able to maintain its financial performance despite the challenges posed by the pandemic. This study contributes to the understanding of the resilience and adaptability of Islamic banks in the face of economic shocks and highlights the importance of robust risk management and governance practices in ensuring financial stability during times of crisis.