scholarly journals Strategic risk management for enhanced corporate governance

2016 ◽  
Vol 13 (4) ◽  
pp. 173-182 ◽  
Author(s):  
Hugh Grove ◽  
Maclyn Clouse
Keyword(s):  
Risk Assessment ◽  
Risk Management ◽  
Corporate Governance ◽  
Boards Of Directors ◽  
Prediction Models ◽  
Management Approach ◽  
Economic Risk ◽  
Management Procedures ◽  
International Investing ◽  
Chinese Company

The purpose of this research is to develop and apply risk management procedures to enhance corporate governance, using examples of Chinese company investments. Strategy and risk should be considered together by management and boards of directors as they need to know what risks are embedded in potential or approved strategies. Strategy and risk are linked and may be viewed as two sides of the same coin. One of the fastest ways to massive value destruction is to undertake a strategy without a thorough consideration of the related risks. Well-known financial fraud prediction models and ratios are applied to an ongoing, possible fraudulent Chinese company. They generated numerous red flags for possible fraudulent financial reporting, using one and two standard deviation measurements for risk assessment. This paper finds potential international equity and debt investment destruction of $12.9 billion for this one company and $34.5 billion when this company’s investment losses are combined with three other ongoing possible Chinese fraud companies. In summary, a risk management approach for enhanced corporate governance is developed and applied to the strategy of international investing. A case study is used to demonstrate both a macro-economic risk assessment of an investment target country and a micro-economic risk assessment of an investment target company, using fraud models and ratios

scholarly journals Corporate governance: A risk management approach

2013 ◽  
Vol 10 (2) ◽  
pp. 104-113 ◽  
Author(s):  
Tracy Xu ◽  
Hugh Grove ◽  
Philipp Schaberl
Keyword(s):  
Risk Factors ◽  
Risk Management ◽  
Corporate Governance ◽  
Boards Of Directors ◽  
Securities And Exchange Commission ◽  
Annual Reports ◽  
Management Approach ◽  
Rating Systems ◽  
Public Companies ◽  
The U.S

Risk management committees are now required for all U.S. financial institutions that are regulated by the U.S. Federal Reserve Bank. All U.S. public companies must now report their risk management activities for both Board of Directors and top management in their 10 K annual reports to the U.S. Securities and Exchange Commission (SEC). This paper analyzes one approach to risk management for public companies and their Boards of Directors. Since 2011, Disclosure Insight Inc. has issued risk ratings for over 1500 public companies in US. Its risk rating is based on the number, nature, and timing of 100 risk factors, which are across major categories, such as the SEC investigative activity, auditor issues, capital market events, and corporate governance issues. Our study finds significant positive abnormal risk-adjusted returns for companies with lower risk ratings and these companies also outperform the S&P500. Thus, this paper should be of interest to investors, company executives, and risk management committees, as well as SEC and other regulators. Alternatively, risk management committees in public companies could just establish their own rating systems, based upon their own key factors, as opposed to using the Disclosure Insight Inc. aggregate rating approach for all 100 risk factors.

Corporate Governance and Risk Management on Listed Banks, The Tanzania Perspective

2021 ◽  
Vol 8 (1) ◽  
pp. 27
Author(s):  
Erick Lusekelo Mwambuli ◽  
Avitus Mwebembezi Dominick
Keyword(s):  
Risk Management ◽  
Corporate Governance ◽  
Board Of Directors ◽  
Ownership Structure ◽  
Management Practices ◽  
Stock Exchange ◽  
Management Approach ◽  
Financial Risks ◽  
The Board Of Directors

The study was to assess on corporate governance and risk management in Tanzania. The study was guided by three objectives which were to assess if transparency, disclosure and audit have significant effect on risk management of the firm, to assess if the board of directors have significant effect on risk management of the firm and evaluate if the ownership structure have significant effect on risk management of the firm. Furthermore, we assess how corporate governance and particularly board of directors, ownership structure, transparency disclosure and audit can affect risk management practices in the context of Dar es Salaam stock exchange listed banks. By the use of a content in analysis approach, the level of exposing the risks in terms of likelihood, consequences of such risk and the strategies used for managing that risk were identified for each kind of risk by using attributes. The results show that corporate governance is related to board of directors, ownership structure, transparency, disclosure and audit play a positive significant and crucial role in establishing an integrative risk management approach. The results from data collected demonstrate that corporate governance has positive significant effect in determining the the good quality of risk management through the level of risk-taking in decisions, especially in terms of financial risks management.

scholarly journals Uncertainty and Risk Phenomenon in the Enterprise Managing

2021 ◽  
pp. 129-138
Author(s):  
R.M. Kachalov ◽  
◽  
F.L. Kurshina ◽  
O.A. Pletenenko ◽  
◽  
...  
Keyword(s):  
Risk Management ◽  
Control Object ◽  
Risk Level ◽  
Economic Science ◽  
Economic Risk ◽  
Operational Characteristics ◽  
Management Procedures ◽  
Modern Economic ◽  
Specific Culture ◽  
Uncertain Future

Periods of aggravation of the situation in the economy and politics, especially in connection with the crisis and transformation processes in society, are usually accompanied by increased interest in the problem of the phenomenon of risk and uncertainty in the economy. In this regard, the main results of creating methodological support and its practical application for solving management problems of modern production enterprises are analyzed. It is taken into account that management decisions are developed and implemented in an uncertain future state of the management object, as well as incomplete information about the past and current state of the surrounding socio-economic environment. Since in this case it is impossible to estimate in advance possible hindrances and obstacles to the «movement» of the controlled object to the goal and ways to overcome them, modern economic science has introduced the concept of «the phenomenon of economic risk» to solve this problem. It is proved that with the help of this concept and its applied characteristics, it is possible to analyze the purposeful activity of the control object and develop ways to control it when moving towards the goal in conditions of uncertainty. The main operational characteristics and variables of the risk management subsystem are analyzed, as well as applied methods for implementing risk management procedures in modern enterprises. It is shown that to reduce the economic risk level in the activities of enterprises, first of all, it is necessary to draw attention to the problem of forming a specific culture of risk management within economic organizations, which will allow using the advantages and positive features of such a culture to improve the efficiency of enterprises, including in the conditions of digitalization of the general economic space. The hypothesis is introduced that the inevitable spread of risk management in the practice of modern and especially promising enterprises as economic managed objects should be based, including on the application of the achievements of behavioral economic theory.

scholarly journals Analysis of the effect of corporate governance attributes on risk management practices

2018 ◽  
Vol 8 (1) ◽  
pp. 14-23 ◽  
Author(s):  
Raef Gouiaa
Keyword(s):  
Risk Management ◽  
Corporate Governance ◽  
Management Practices ◽  
Management Approach ◽  
Financial Risks ◽  
Research Attention ◽  
Operating Process ◽  
Governance Systems ◽  
Enterprise Risk ◽  
Increased Risk

Despite recent increased risk research attention being focussed on the Canadian and international scene, there are few research studies that specifically address the relation between corporate governance systems and risk management practices. This paper examines the relation between corporate governance systems and enterprise risk management. More specifically, we analyze how corporate governance attributes and particularly board characteristics can affect risk management practices in the context of Canadian listed companies. Using a content analysis approach, the level of exposure to risk in terms of likelihood, the consequences of such risk and the strategies for managing that risk were identified for each type of risk. The results reveal that corporate governance attributes related to board’s structure, directors’ characteristics and the board’s operating process play a significant and important role in establishing an integrative risk management approach. The results show that directors’ characteristics and the board’s process significantly determine the quality of risk management through the level of risk-taking in decisions, especially in terms of financial risks.

scholarly journals The role of risk management in corporate governance: Guidelines and applications

2017 ◽  
Vol 7 (4-1) ◽  
pp. 92-99
Author(s):  
Hugh Grove ◽  
Maclyn Clouse
Keyword(s):  
Risk Management ◽  
Corporate Governance ◽  
Financial Reporting ◽  
Boards Of Directors ◽  
Private Equity ◽  
Limited Liability ◽  
Cash Flows ◽  
Financial Statement ◽  
Coverage Ratio

Risk management should be a key concern of board members to enhance corporate governance in any organization. Eleven key numbers, ratios, and models were advocated in this paper for risk management analyses, including an analysis of their variability with graphs. They are applied to Kaisa, a Chinese property developer, located in Shenzhen but incorporated with limited liability in the Cayman Islands. The importance of such risk management analyses was demonstrated in this paper as Kaisa destroyed $12.9 billion in four different types of investments: $2.2 billion in stock market value, $0.3 billion in private equity investments, $2.5 billion in global bonds, and $7.9 billion in Chinese short-term and long-term debt. Thus, the use of key financial statement metrics, including fraud models and ratios, has been shown here to provide enhanced corporate governance with risk management guidelines and applications. Boards of Directors need to pay attention to key financial statement metrics, which have been shown to work over and over again, as with Kaisa in this paper. These key metrics usually start with operating cash flows which then may indicate problems with debt service (the fixed charge coverage ratio) which then may lead to bankruptcy predictions by the Altman bankruptcy model. To cover up such survival problems, companies often resort to earnings management and even fraudulent financial reporting which are typically red flagged by the quality of earnings, the quality of revenues, the new fraud model and the old fraud model.

scholarly journals Lehman Brothers and Bear Stearns: risk assessment and corporate governance differences?

2013 ◽  
Vol 11 (1) ◽  
pp. 611-620 ◽  
Author(s):  
Hugh Grove ◽  
Lorenzo Patelli
Keyword(s):  
Risk Assessment ◽  
Risk Management ◽  
Corporate Governance ◽  
Financial Crisis ◽  
Federal Government ◽  
Government Support ◽  
Investment Bank ◽  
Lehman Brothers ◽  
Governance Practices ◽  
Bail Out

In mid-March, 2008, with substantial government support, JP Morgan Chase agreed to acquire Bear Stearns for $10 per share. Because Bear’s shares traded at $170 a year earlier, the market cap destruction of 94% was devastating to the once venerable investment bank and its investors. The Financial Crisis Inquiry Commission had also cited as failure the inconsistent treatment by the federal government in helping to bail out Bear Stearns in March, 2008 but letting Lehman Brothers go into bankruptcy in September, 2008. This paper investigates such inconsistencies by comparing and assessing the risk management and corporate governance practices of Bear Stearns and Lehman Brothers in their March-September, 2008.

scholarly journals Application of ISO 31000-Based Risk Assessment to Improve Balanced Scorecard Performance at Shofa Pharmacy

2021 ◽  
Vol 8 (2) ◽  
pp. 251
Author(s):  
Riko Luke Nugroho ◽  
Perminas Pangeran
Keyword(s):  
Risk Assessment ◽  
Risk Management ◽  
Balanced Scorecard ◽  
Risk Group ◽  
Political Risk ◽  
Risk Level ◽  
Economic Risk ◽  
Project Risk ◽  
The Balanced Scorecard ◽  
Iso 31000

This study aims to integrate the Balanced Scorecard and Risk Management at Shofa Pharmacy and its one branch. The risk assessment is based on the ISO 31000 framework model and the Balanced Scorecard is based on a financial perspective, a customer perspective, an internal business perspective and a learning and growth perspective. The results of risk identification show that the risks faced by Shofa Pharmacy are financial risk, operational risk, technology risk, business ethics risk, health and safety risk, economic risk, legal risk, political risk, market risk, and project risk. Based on the results of the analysis, the highest risk is technology risk with the risk group in information technology protection, economic risk with the fall in demand risk group, political risk with the inflation risk group and project risk with an evaluation risk group, then risk management is carried out to reduce the risk level.

scholarly journals Project risk assessment of higher education online learning project during the Covid-19 crisis

2021 ◽  
Vol 13 (4) ◽  
pp. 602-616
Author(s):  
Putra Endi Catyanadika ◽  
Dessy Isfianadewi Isfianadewi
Keyword(s):  
Higher Education ◽  
Risk Assessment ◽  
Risk Management ◽  
Online Learning ◽  
Online Teaching ◽  
Management Approach ◽  
Project Risk Management ◽  
Project Risk ◽  
Severity Scores ◽  
Risk Breakdown Structure

This research aims to identify and assess the project risks of online teaching in Indonesian higher education institutions during the COVID-19 crisis. Two analyses have been conducted using the project risk management approach. First, a triangulation analysis based on interviews with 35 online teaching stakeholders was implemented in order to construct a risk breakdown structure to identify major registered risks. Second, a risk assessment calculating the severity score of each registered risk was conducted using an online survey with 125 online teaching participants. The results of these analyses concluded that there were 11 registered risks, with the highest risk exposure in the technological area. In terms of risk criticality, inadequate Internet connection and an inconducive learning environment were selected as the most critical risks with the highest severity scores. These results imply the importance of focussing on the technological risk mitigation and strategy policies to prepare for future online learning projects after the COVID-19 crisis in Indonesia. Keywords: distance learning, online teaching, project risk management, risk breakdown, structure.  

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