Enterprise-Wide Risk Management Best Practices: The Critical Success Factors (original) (raw)
This paper examines the critical success factors of effective Enterprise-Wide Risk Management (EWRM) practices that have an effect on shareholder value. Financial and non-financial companies of Public Listed Companies (PLCs) of service sector had been chosen as a population to determine the crucial factors that should be considered for a success implementation of EWRM. A triangulation approach was adopted to get an enriched data collection and analysis for the study. From a survey on 14 financial companies and 41 nonfinancial companies and 4 companies of a case study, it is found that organisational culture is a most critical factor which contributes more to a success implementation of EWRM and has an effect on shareholder value. Significantly, the function and the effectiveness of other critical success factors were depended on strong organisational culture. The other EWRM critical success factors identified were risk management base, compliance, resource, crossfunctional staff, knowledge management, and authority or power.
Sign up for access to the world's latest research
checkGet notified about relevant papers
checkSave papers to use in your research
checkJoin the discussion with peers
checkTrack your impact
Sign up for access to the world's latest research
Related papers
Enterprise Risk Management: Factors Associated with Effective Implementation
SSRN Electronic Journal, 2015
Risk management is undergoing a great change, as organizations shift from the traditional and compartmental to an enterprise wide approach. Consequently, enterprise risk management (ERM) is gaining global attention among risk management professionals and academics. The demand for the adoption of ERM has led to several companies embracing it, yet its implementation has become challenging. Research shows that ERM approach emphasizes a holistic approach for assessing and evaluating the risks that an organization faces as against the "silo" approach of the traditional methods. The extant literature shows that through the reduction of the risk that an organization faces, ERM is capable of improving the performance and value. The study used a non-experimental correlational approach to explore the relationship between the presence of a chief risk officer (CRO) and an audit committee (AC), and the support of top management (TM) in relation to the implementation of ERM. A survey instrument was provided to self-identified risk-management professionals who are members of Survey Monkey Audience Service database. The target sample frame requested for analysis using a power of .95 was (n = 119). However, the final number analyzed was (n = 134). Frequencies and percentages were conducted on the demographic survey items and regression and correlational analyses were also performed. The study findings show that there was a significant relationship between the role of a CRO, the presence of an AC, and the support of TM and the level of ERM deployment. The study also found significant correlations between management support level and CRO, and AC. In addition, a much strong positive correlation was noted between the presence of a CRO and an AC.
Enterprise risk management: Challenges and the strategies for success
International Journal of Research in Business and Social Science (2147- 4478)
The objective of this paper is to identify the challenges of implementing and adopting an effective ERM system and to suggest alternative strategies that could be pursued as countermeasures to those challenges. This study is based on survey data gathered from 379 respondents representing 129 companies listed on the Colombo Stock Exchange of Sri Lanka. This study found that the lack of availability of information to make risk-based decisions; the need to ensure that all decisions are made within the organization’s risk tolerance level, and the lack of top management support for ERM implementation; are the most influencing challenges for business organizations that obstruct ERM effectiveness. This study suggests that organizations should promote a good corporate culture that fosters ERM supportive internal environment. It is also suggested that the support of the top management and their commitment to being corporative with the firms’ ERM function without making ERM is the sole respon...
Enterprise Risk Management Good Practices and Proposal of Conceptual Framework
The objectives of this paper are: a) summarize the behavior patterns in the adoption of risk management practices by the companies surveyed; b) move into a convergence between theoretical practices and those adopted by the companies. This research is theoretical-empirical with descriptive objective and the procedure is multiple case study of ten companies. The criteria adopted for choosing these ten companies were the diversity of the industry segments, representativeness of the companies in their segments and the use of enterprise risk management. To verify if there are patterns between the practices employed in the companies, they were separated by size and nationality. All the small size companies are of traditional approach. The same happens with all the national companies. Yet, all the traditional approach companies, but one, adopt all the seven risk management practices found in the literature. Among the practices, only one – independence between board and CEO – is adopted by all the ten companies. Several practices have been adopted by the companies and not found in the literature. The contribution of this article is to develop a conceptual framework of ERM covering the cycle of risk management, its results and tools that lead to good practices
The Role of Risk Culture in Enterprise Risk Management Implementation
International Journal of Business and Management
Enterprise Risk Management (ERM) and risk culture academics and practitioners have argued that they are inherently related without empirical evidence. They continue to advocate for their implementation by firms to face the dynamic business environment with certainty. The lack of empirical evidence to underpin this relationship partly contributes to their fragmented implementation and the lack of proper attention to risk culture in ERM implementation. The challenge in measuring these two abstract concepts contributes to their dichotomous measures in the literature, with most studies concentrated in the developed economies. The study objective is to provide a comprehensive measurement of the two constructs and empirically determine their relationship in the less-researched context of Africa. The study results empirically confirm risk culture and ERM to have a significant positive relationship. A firm's size and financial leverage were found to be significant determinants for ERM i...
Journal of Accounting and Public …, 2005
Enterprise risk management (ERM) has emerged as a new paradigm for managing the portfolio of risks that face organizations, and policy makers continue to focus on mechanisms to improve corporate governance and risk management. Despite these developments, there is little research on factors associated with the implementation of ERM. Research is needed to provide insights as to why some organizations are responding to changing risk profiles by embracing ERM and others are not.
International Journal of Business and Management
This paper intends to vindicate the influence of Enterprise Risk Management (ERM) implementation on firm performance. A sample of 11 oil and gas Public Listed Companies (PLC’s) were selected in this study. Data were collected using content analysis with regard to the companies’ ERM practices and their financial performances. ERM implementation was measured using COSO’s ERM integrated framework while the firm financial performance was assessed through return on assets (ROA) measurement. Multiple regression analysis was performed to test eight developed hypotheses. Results indicate that four components of the ERM framework, i.e. supportive internal environment, objective setting, control and monitoring activities, are found to be positive and significant predictors for the firm’s performance. The findings support the efficacy and potential strengths of ERM implementation in the oil and gas companies.
International Journal of Engineering Technologies and Management Research, 2019
Enterprise risk management (ERM) has gained an increased attention among the corporate managers in the recent past as a strategic approach to managing risk. This study empirically verifies whether the adoption of ERM has an impact on firm performance and uses both primary and the secondary data relating to the insurance companies listed on the Colombo Stock Exchange. Return on equity (ROE) is used as a proxy to measure the firm performance and multivariate regression analysis is used to analyze data. The findings of this study suggest that there is a weak positive relationship between the adoption of ERM practice and the return on equity. Out of the eight ERM functions assessed, only 'event identification' and 'control activities' show a weak positive relationship with ROE. Other ERM functions indicate that there is a weak negative relationship with ROE. The findings of this study contradict with some scholars who find there is a significant positive relationship between adoption of ERM and firm performance. Owing to the contradictory nature of the findings, this study induces corporate managers to pay a close attention to the cost-benefits analysis when designing and implementing ERM system and not to heavily invest and extensively relied upon ERM as a vehicle for creating long-term shareholder value.
Enterprise Risk Management and Firm Performance Validated Through 2
— Enterprise Risk Management (ERM) is an essential technique, used to manage a myriad of risks in a holistic manner. This paper presents an ERM implementation framework which is operationalized by fourteen elements. It highlights the impact of ERM towards the firm's performance measured through Economic Value Added (EVA) factors. The research design incorporates descriptive and cross-sectional analysis. Data was collected from 120 public listed companies in Bursa Malaysia through questionnaires survey. Results of the empirical analysis show that ERM implementation has significant positive impact on firm's performance. The results support the hypothesis that the firms which implements ERM will enhance their performance as validated through the perceived measurement of EVA factors. This study offers a perspective of measuring ERM implementation impact through EVA factors as compared to the accounting measures.
Enterprise risk management: An important process for feasible profit and growth
Contaduría y Administración
This study is based on the importance of enterprise risk management systems in the organization. Enterprise risk management is a tool that helps organizations to identify those areas which possess potential risks and on how to mitigate those risks. The objective of this paper is to investigate the importance of the ERM system to the firms' achievement of financial and economic goals. The study focused on four independent variables which are controlling risk, the role of the board of directors, the role of the management, and the size of the organization while the dependent variable is the performance of the firm. Using the quantitative approach, data were collected from 3 organizations namely KPMG Taseer Hadi, Deloitte Pakistan, and a bank known as Islamic Bank, the Bank Islami Private Limited. Purposive sampling was employed to take a 100-sample size from different departments. Key outcomes revealed that the controlling risk, the role of the board of directors, and the size of the organization significantly influenced the performance of the firms while there is no significant impact on the role of management on the firm's performance. Based on these findings, it is highly recommended to implement the ERM system as it will help in achieving the long-term economic and financial goals of the corporation.
Loading Preview
Sorry, preview is currently unavailable. You can download the paper by clicking the button above.