Enterprise Risk Management Determinants and Operational Excellence: A Structural Modelling Approach (original) (raw)
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Future Business Journal, 2020
Globally, the challenges of the oil and gas industry are unique due to the nature of its operations that is full of risks. Issues like volatile market prices, health and safety, environmental performance and high cost of production are affecting the operational performance of the sector. These problems if left unchecked could change the level of production and revenue generation to the Malaysian government and would as well influence the country’s regional position in oil and gas production. As a result, many oil and gas firms including PETRONAS adopted operational excellence strategy, but some of the challenges kept re-occurring. It is against this circumstance that this research is aimed at determining the effect of enterprise risk management determinants on operational excellence in the Malaysian oil and gas industry. It is also aimed at exploring the mediating effect of enterprise risk management implementation on such a relationship. The article used a conceptual approach where...
Path of Science
The current global business climate has not been favorable to most firms irrespective of industry affiliation. That condition necessitated companies to adopt operational excellence as a strategy for optimising output with little resources, reducing lead time with the efficient use of assets and employees and avoiding safety and health issues to people and the environment. As a result of the need for operational excellence, many kinds of literature defined the concept based on the context of industry or sector. Industries such as manufacturing, services, oil and gas, mining and so many industries to mention a few, have their unique construct in the definition and therefore causing dilemma on which dimension to hold on to. It is against this backdrop that this paper synthesizes and integrate all the varying dimensions and fuses out similarities, differences and the antecedence of research directions taken on the few mentioned sectors. The paper thus concludes that the unique construct among all the definitions is continuous improvement, cost reduction, quality, time utilization, operational efficiency, staff involvement and output optimisation. However, they varied on risk management, staff health, safety and the concern for the environment, which is unique to oil and gas industry and that can affect the choice of research variables.
economies, 2018
This study empirically investigated the ERM Implementation model and proposed framework to identify and manage risks in Oil and Gas Sector in Malaysia. The study examined the role of ERM framework implementation in improving business performance by utilizing Economic Value Added as a measurement tool. The study also provides insights to the Oil and Gas Sector to gain higher profit returns, reduce cost of capital, and improve shareholders value. Moreover, it contributes significantly in the field of Enterprise risk management in Malaysia. The identification and management of risk is significant to organizations in managing risks efficiently. Expectations of stakeholders of the organization are high from executives and board of directors in managing the risk effectively. Linear regression analysis is utilized in analyzing the data obtained from the data collection performed for this paper. Purposive sampling has been employed in order to select the firms that are operating in Malaysian oil and gas sector. Primary data has been utilized to collect data with the help of structured questions and interview techniques that involve semi structured questions. The results of the regression analysis conducted for in this study suggested that a significant and positive relationship between Enterprise Risk Management with operational risk; market risk; political risk; health, safety and environmental risk; and, also business performance.
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.
Organizational Factors in Enterprise Risk Management Effectiveness: A Conceptual Framework
International Journal of Academic Research in Business and Social Sciences
During the last financial crisis there were many companies suffered losses despite their engagement in enterprise risk management (ERM). Most of the literatures on ERM effectiveness give little attention to the elements of human and organizational factors. Therefore, it is important to give a close attention to current ERM practices and measure the effectiveness of ERM frameworks in the context of Malaysia especially by considering one of the elements namely organizational factors. The main objective of this study is to develop a conceptual model that shows relationship between organizational factors and ERM effectiveness. An extensive literature search was employed for this study. This study contributes to enhance the body of knowledge in ERM specially in understanding significant organizational factors that influence ERM effectiveness from Malaysian perspective.
Lafia Journal of Economics and Management Sciences, 2023
The concept of organizational performance has emerged as a key area of focus for modern businesses. This study sought to investigate whether enterprise Risk Structure Matters for Organizational Performance of Telecommunication Companies in Nigeria. The research adopted a descriptive survey design. A random sampling technique was adopted for the study and data was collected using a structured questionnaire with the help of a Google survey form. The sample population consisted of 379 respondents drawn from Nigerian telecommunication companies out of which 372 were completely and accurately filled. Multiple regression method of data analysis was employed to test the relationship between enterprise risk structure and organizational performance. The study result shows that outlined objectives had no significant effect on organizational performance. Also, the study result shows risk culture has a significant influence on organizational performance. Findings from the study show that performance indicators have a significant influence on organizational performance. Furthermore, findings from the study shows that risk indicators have a significant influence on organizational performance. It was concluded that it is challenging to merely credit performance to the outlined objectives of the firm because the ability of the organization to successfully manage risks is increased by a strong risk culture and risk indicators offer useful insights into the elements with adverse effects on the company's performance. It was therefore, recommended telecommunication companies should implement a comprehensive performance and risk management measure that takes into consideration every aspect that track and reports identified risk on a regular basis.
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Stiffer regulations, the rise in the cost of production, health, safety and environmental issues are some of the daring challenges faced by the oil and gas sector in recent time. Other complexities include pricing framework, advancement in technology, ageing of assets, continued depletion of oil reserves (Mustapha, Umeh & Adepoju, 2015). Also, the increasing stakeholders demand oil firms perform at all cost is the current situation in the oil and gas industry. These pressures compelled the firms in the sector to develop and adopted a strategy that helped them reduce and control some of the challenges. Thus the top strategic priority for oil and gas firms remains operational excellence for cost reduction, and health and safety programs (PwC, 2017). With operational excellence in place, primary containment loss drops by 40%-50%, export deferrals declines by 98.5% and emergency and reactive activities reduces by 80%-90%
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The aim of this paper is to demonstrate the integration between performance and risk management through the use of balanced scorecard performance measurement tool. Both performance and risk management in organization's evaluation have several benefits for the organization's activities and, if applied properly, it can help an organization to reach its anticipated objectives. This research consists of two parts. In the first part, we present a review of the recent theoretical literature related to 1) the concept of performance and risk