Determinants and Value of Enterprise Risk Management: Empirical Evidence From the Literature

2015 ◽  
Vol 18 (1) ◽  
pp. 29-53 ◽  
Author(s):  
Nadine Gatzert ◽  
Michael Martin
Keyword(s):  
Risk Management ◽  
Empirical Evidence ◽  
Enterprise Risk Management ◽  
Enterprise Risk

Why do firms adopt enterprise risk management (ERM)? Empirical evidence from France

2016 ◽  
Vol 54 (8) ◽  
pp. 1886-1907 ◽  
Author(s):  
Majid Jamal Khan ◽  
Dildar Hussain ◽  
Waqar Mehmood
Keyword(s):  
Risk Management ◽  
Empirical Evidence ◽  
Survival Data ◽  
Proportional Hazards Model ◽  
Enterprise Risk Management ◽  
Cox Proportional Hazards Model ◽  
Annual Reports ◽  
Management Approach ◽  
Content Type ◽  
Enterprise Risk

Purpose Enterprise risk management (ERM) is a risk management approach that calls for integrating all the organization-wide risks and takes a portfolio view point of managing organizational risks. The purpose of this paper is to investigate the factor that influence a firm’s decision to adopt ERM. Design/methodology/approach The authors employ a particular technique of survival data analysis, the Cox proportional hazards model, to investigate the factors that lead towards the decision of initiating an ERM programme. The authors constructed a unique sample of French firms derived from the information in 315 corporate news announcements for the hiring of a chief risk officer and information retrieved from publicly available annual reports to identify firms that initiated an ERM programme, over the period from year 1999 to 2008. Findings The results suggest that besides the growing international and local regulatory pressure, factors that are internal to the organizations like the expected probability of financial distress and its explicit and implicit costs, poor earnings performance and the existence of growth opportunities play vital role in motivating firms to adopt ERM. It was also found that corporate governance practices such as the independence of the board may also lead towards an initiation of the ERM. Originality/value This study makes theoretical and methodological contribution the ERM literature by employing a novel methodology and presenting empirical evidence based on data form French firms.

scholarly journals The Role of Risk Culture in Enterprise Risk Management Implementation

2020 ◽  
Vol 15 (11) ◽  
pp. 13
Author(s):  
Mohamed Santigie Kanu
Keyword(s):  
Risk Management ◽  
Organizational Performance ◽  
Empirical Evidence ◽  
Business Environment ◽  
Enterprise Risk Management ◽  
Study Objective ◽  
Enterprise Risk ◽  
Risk Appetite ◽  
Study Results ◽  
Risk Culture

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 implementation, whereas capital opacity, financial slack, and board composition are not. Organizational leaders are advised by the study not to treat risk culture and ERM as substitutes but as complements. A sound risk culture provides a solid base for ERM implementation. Risk culture should be managed and developed in full alignment with the risk appetite and the ERM framework to improve organizational performance. These shall enable the promotion of a risk-aware culture and ingraining risk-related measures into performance management that help drive the organization forward. The constructs measures presented in the study can be used by academics and risk practitioners to determine the level of risk culture and ERM implementation in organizations.

Integrating Enterprise Risk Management with Strategic Planning for Improved Firm Performance

2020 ◽  
Vol 5 (5) ◽  
Author(s):  
Mohamed Santigie Kanu
Keyword(s):  
Risk Management ◽  
Firm Performance ◽  
Strategic Planning ◽  
Financial Performance ◽  
Empirical Evidence ◽  
Enterprise Risk Management ◽  
Primary Data ◽  
Return On Assets ◽  
Planning Stage ◽  
Enterprise Risk

The purpose of this paper is to investigate whether the integration of ERM at the strategic planning stage improves a firm's financial performance measured in terms of return on assets. Many researches in the literature have focused on the determinants of ERM implementation and its effects on firm performance. In most of these studies, the ERM concept has been measured dichotomously. A comprehensive measure of ERM is used in this study from primary data gathered based on an established ERM framework. The results show that ERM implementation is not significantly related to firm performance. However, empirical evidence is provided that if ERM is integrated with strategic planning, firm performance shall significantly improve. The comprehensive ERM measure provided contributes to the literature as it enables risk practitioners to assess the level of risk management in their organizations. ERM researchers can use this measure to do away with the dichotomous ERM measure. Furthermore, the study provides evidence of strategic planning, serving as a mediator in the ERM and firm performance relationship in a less investigated context of Africa.

Sign in / Sign up

Export Citation Format

Share Document