scholarly journals Enterprise Risk Management (ERM) Practices to Achieve Long Term and Sustainable Organization’s Goals: Case of Institut Teknologi Bandung (ITB)

2021 ◽  
Vol 04 (12) ◽  
Author(s):  
Johan Candra ◽  
Keyword(s):  
Risk Management ◽  
Management Practices ◽  
Management Practice ◽  
Global Scale ◽  
Enterprise Risk Management ◽  
Trade Offs ◽  
Enterprise Risk ◽  
Risk Appetite ◽  
Iso 31000

Every choice made in the pursuit of objectives has its risks. From day-to-day operational decisions to the fundamental trade-offs in the boardroom, dealing with uncertainty in these choices is a part of the organizational lives. A strategy is nothing more than a commitment to a set of coherent, mutually reinforcing policies or behaviours aimed at achieving a specific competitive goal. In order to ensure the implementation of efforts and the allocation of resources to achieve strategic goals, top management should conduct integrated risk management practices to all activities/initiatives of the organization’s management, both individually and collectively. Risk management is an intrinsic part of business planning and decision making. No direction is taken without looking at the potential risks and comparing them against the organization’s risk appetite. This paper aims to research in general the practice of enterprise risk management within Institut Teknologi Bandung (ITB) as a well-known and public-state-owned university in Indonesia. This research concludes that the enterprise risk management implementation is not fully implemented yet within ITB as an enterprise. Almost all respondents agree that the implementation of enterprise risk management has a positive and significant influence on the organization’s objectives achievement. Improving university performance overall will require an effective enterprise risk management practice. Author highly recommends ITB to adopt risk management practice based on ISO-31000 standard, and it can be combined with other risk management standards available nowadays if necessary. ITB needs to start the implementation at the soonest as possible, in order to maintain its strategic position as a top university in Indonesia, increase its competitive advantages to compete in the global scale, and at the same time achieving its vision and mission in a long-term and sustainable manner.

Enterprise risk management and sustainability of banks performance

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Babajide Oyewo
Keyword(s):  
Risk Management ◽  
Banking Sector ◽  
Management Practice ◽  
Enterprise Risk Management ◽  
Annual Reports ◽  
Banking Reform ◽  
Content Type ◽  
Enterprise Risk ◽  
The Impact

PurposeThis study investigates firm attributes (namely level of capitalisation, scope of operation, organisational structure, organisational lifecycle, systemic importance and size) affecting the robustness of enterprise risk management (ERM) practice, the extent to which ERM affects the performance of banks and the impact of ERM on the long-term sustainability of banks in Nigeria. This was against the backdrop that the 2012 banking reform was a major regulatory intervention that mainstreamed ERM in the Nigerian banking sector.Design/methodology/approachThe study employed a mixed methodology of content, trend and quantitative analyses. Ex post facto research design was deployed to analyse performance differential of banks, with respect to the implementation of ERM, over a 10-year period (2008–2017). A disclosure checklist developed from the COSO ERM integrated framework was used to assess the robustness of ERM by content-analysing divulgence on risk management in published annual reports. The banking reform periods were dichotomised into pre- (2008–2012) and post- (2013–2017) reform periods. Jonckheere–Terpstra test, independent sample t-test and Mann–Whitney test were applied to analyse a total of 1,036 firm-year observations over the period 2008–2017.FindingsResult shows that bank attributes significantly affecting the robustness of risk management practice are level of capitalisation, scope of operation, systemic importance and size. Performance of banks improved slightly during the post-2012 banking reform period. This suggests that as banks consolidate on the gains of ERM, benefits of the regulatory policy on risk management may be realised in the long run. Result also shows that ERM enhances long-term performance, connoting that effective risk management could serve as a competitive strategy for surviving turbulence that typically characterises the banking sector.Practical implicationsThe emergence of level of capitalisation, scope of operation, systemic importance and size as determinants of ERM provides empirical evidence to support the practice of reviewing the capital requirements for banking business from time to time by regulatory authorities (i.e. recapitalisation policy) as a strategy for managing systemic risk. Top management of banks may consider instituting mechanisms that will ensure risk management is given prominence. A proactive approach must be taken to convert risks to opportunities by banks and other financial institutions, going forward, to cope with the vicissitudes of financial intermediation.Originality/valueThe originality of the study stems from the consideration that it provides some new insights into the impact of ERM on banks long-term sustainability in a developing country. The study also contributes to knowledge by exposing the factors determining the robustness of risk management practice. The study developed a checklist for assessing ERM practice from annual reports and other risk management disclosure documents. The paper also adds to the scarce literature on risk governance and risk management.

scholarly journals Review of Literature on Methodological Approaches of Assessing the Adoption of Enterprise Risk Management Practices

2021 ◽  
pp. 21-26
Author(s):  
S. P. G. M. Abeyrathna ◽  
A. J. M. Priyadarshana ◽  
U. D. P. Priyashantha
Keyword(s):  
Risk Management ◽  
Management Practices ◽  
Secondary Data ◽  
Enterprise Risk Management ◽  
Primary Data ◽  
Review Of Literature ◽  
Dummy Variables ◽  
Enterprise Risk ◽  
Iso 31000 ◽  
Methodological Approaches

This study intends to examine the previous researches on Enterprise Risk Management (ERM). On examining the previous researches, it is evident that both primary data based (using robust models) and secondary data based (using Dummy variables) approaches adopted by the previous researchers and those are taken into account and have been reviewed in this paper. In here, researchers have identified that most of the recent studies have used robust models in assessing the adoption of ERM practices, while earlier researchers used dummy variables in assessing ERM practices. Here, in some cases, there are some contradictories of results of the studies in two approaches. Based on the recommendations, conclusions of prior research, and the analysis of the available literature, it has been recommended to use robust models like COSO ERM framework, ISO 31000 etc. in case of assessing the adoption of ERM practices in future studies.

Does the hiring of chief risk officers align with the COSO/ISO enterprise risk management frameworks?

2017 ◽  
Vol 25 (3) ◽  
pp. 274-295 ◽  
Author(s):  
Erastus Karanja
Keyword(s):  
Risk Management ◽  
Enterprise Risk Management ◽  
Clear Understanding ◽  
Press Releases ◽  
Apparent Lack ◽  
Content Type ◽  
Business Operations ◽  
Enterprise Risk ◽  
The Press ◽  
Iso 31000

Purpose There are two main industry-sanctioned enterprise risk management (ERM) models, that is, COSO 2004 and ISO 31000:2009, that firms refer to when implementing ERM programs. Taken together, the two ERM models specify that firms should implement ERM programs to meet a strategic need, improve operations and reporting or to comply with government regulations or industry best practices. In addition, the focus of ERM implementation should be either the subsidiary, business unit, division, firm/entity or global level. The purpose of this study is to investigate whether firms are aligning their ERM implementations with these tenets: strategy, operations, reporting, compliance and the level of implementation. Design/methodology/approach The proxy for ERM implementation is the hiring of a Chief Risk Officer (CRO). The research data come from a sample of 122 US firms that issued a press release following the hiring of a CRO between 2010 and 2014. The press releases were retrieved and aggregated through content analysis in LexisNexis Academic. Findings The results reveal that many ERM implementations are occurring at the firm/entity level, and with the exception of reporting, firms consider ERM to be a strategic firm resource capable of improving business operations and compliance initiatives. Originality/value There is a dearth of research studies specifically investigating whether ERM programs adopted by firms are aligned with the specification of COSO 2004 and ISO 31000:2009 frameworks. The apparent lack of a clear understanding of the alignment between the firm ERM programs and the industry’s ERM frameworks may limit the development and implementation of ERM and the eventual realization of the benefits associated with a successful ERM implementation.

scholarly journals Evaluation of the Level of Enterprise Risk Management Adoption and Maturity of Insurance Companies in Kenya

2017 ◽  
Vol 1 (2) ◽  
pp. 1
Author(s):  
Caroline Njagi ◽  
Dr. Amos Njuguna
Keyword(s):  
Risk Management ◽  
Risk Tolerance ◽  
Enterprise Risk Management ◽  
Strategic Decision ◽  
Insurance Companies ◽  
Top Management ◽  
Organizational Strategies ◽  
Risk Management Framework ◽  
Enterprise Risk ◽  
Risk Appetite

Purpose: The purpose of this study was to evaluate the extent to which insurance companies in Kenya have adopted ERM process, and then to assess the maturity, challenges and strategies in the implementation of this process.Materials and methods: The research design adopted for the study is descriptive research. The researcher conducted a survey on the 49 insurance companies of Kenya to encapsulate the factors that are relevant in articulating the extent of adoption of ERM and the level of maturity. A sample of 196 respondents was selected from a population of 245 respondents. The study used quantitative and qualitative methods of data analysis. Statistical Package for Social Sciences (SPSS) version 20 program was used for analysis. The results were presented using tables and pie charts. Similarly, qualitative data was summarized and categorized according to common themes and presentedin continuous prose form.Results: The study concluded that organizational related challenges hindered implementation of ERM programs. Results revealed that inadequate application of the risk management framework, ambiguity in roles and responsibilities in risk management, complexities in risk measurement, lack of embodiment of ERM in organizational culture, difficulty in risk quantification, linking risk information to strategic decision making, ensuring that all decisions remain within the organization’s risk tolerance, proactively identifying current and emerging risks, cost and budgetary constraints, misalignment of the risk and business operating models, risk management not seen as a priority by top management and inadequate information to make risk-based decisions hindered implementation of ERM frameworks among insurance firms in Kenya. The findings imply that organization related challenges have a significant effect on ERM implementation.Recommendations: The study recommends that there should be better organizational strategies to help improve implementation of ERM programs. It was found that building a strong risk culture, engaging consultants, building a dedicated ERM function, committed board of directors and top management, developing risk appetite statement, appointment of a Chief Risk Officer (CRO) and availing ERM budgets improved the implementation of ERM programs. Key words: enterprise risk management, adoption, maturity

Integration of Project Risk Management (PRM) into Enterprise Risk Management (ERM)

2017 ◽  
pp. 294-317 ◽  
Author(s):  
Ruchi Agarwal ◽  
Lev Virine
Keyword(s):  
Risk Management ◽  
Real Life ◽  
Enterprise Risk Management ◽  
Project Risk Management ◽  
Project Risk ◽  
Holistic View ◽  
Enterprise Risk ◽  
Fundamental Understanding

Integrating Project Risk Management (PRM) into Enterprise Risk Management (ERM) is a multi-year journey and has long term value. ERM provides a holistic view to existing risks and overcomes the disadvantage of risk being managed in silos in PRM. The main aim of integration of two approaches is to mange risk from both macro and micro perspectives by exploiting opportunities while balancing the downside of risk. The chapter provides a fundamental understanding of what ERM is and its components and shows how PRM is a subset of ERM. Issues and opportunities in integrating PRM into ERM are discussed using real life examples. Furthermore, the chapter brings attention to formal and informal ways of integration and concludes by making six recommendations.

Management Accounting And Risk Management Practices In Financial Institutions

2012 ◽  
Author(s):  
Siti Zaleha Abdul Rasid ◽  
Abdul Rahim Abdul Rahman
Keyword(s):  
Risk Management ◽  
Financial Institutions ◽  
Management Practices ◽  
Management Accounting ◽  
Enterprise Risk Management ◽  
Chief Financial Officers ◽  
Operational Risks ◽  
Enterprise Risk ◽  
Budgetary Control ◽  
Contemporary Management

Tujuan kertas kerja ini adalah untuk melaporkan hasil kajian terhadap amalan perakaunan pengurusan dan amalan pengurusan risiko di institusi kewangan. Data dikutip menggunakan borang soal selidik yang dihantar kepada 106 institusi kewangan yang tersenarai di dalam website Bank Negara Malaysia, di mana Ketua Pegawai Kewangan atau pegawai terkanan di jabatan kewangan institusi–institusi tersebut dilantik sebagai responden kajian. Analisis amalan perakaunan pengurusan berdasarkan kerangka IFAC (1998) menunjukkan bahawa amalan yang lazim diguna pakai adalah amalan di peringkat pertama, diikuti dengan amalan selepas era 1995. Dapatan ini menunjukkan bahawa amalan perakaunan pengurusan tradisional masih diguna pakai secara meluas oleh institutsi-institusi kewangan di Malaysia walapun amalan–amalan kontemporari (peringkat ke 4 dan ke atas) telah diperkenalkan. Bagi amalan pengurusan risiko, kebanyakan institusi telah melaksanakan kerangka Enterprise Risk Management (ERM) secara menyeluruh atau sebahagian. Amalan perakaunan pengurusan berkaitan penyata kewangan dan analisis nisbah dianggap sebagai memberikan sumbangan utama kepada pengurusan risiko. Kawalan belanjawan, belanjawan dan pengurusan strategik juga dianggap penting dalam pengurusan risiko operasi. Kata kunci: Perakaunan pengurusan; pengurusan risiko; institusi kewangan The aim of this paper is to report the results of a study on management accounting and risk management practices in financial institutions. The research method involved administering a questionnaire to 106 financial institutions listed on the Malaysian Central Bank’s website and the respondents were the chief financial officers (CFO) or the most senior positions in the finance department of the institutions. Based on the IFAC’s (1998) framework, it was found that the most widely practiced were the management accounting practices at Stage 1, followed by practices of Post 1995. This finding shows that despite the emergence of contemporary management accounting practices (Stage 4 onwards), traditional management accounting that focuses on financial performance and budgetary control is still widely practiced by financial institutions in Malaysia. As for the risk management practices, most of the firms have either implemented a complete or partial Enterprise Risk Management (ERM) framework. The findings from the survey showed that management accounting practices related to financial statement and ratio analysis were perceived to contribute most towards risk management. Budgetary control, budgeting and strategic planning were also perceived to be important in managing operational risks. Key words: Management accounting; risk management; financial institutions

scholarly journals Effectiveness of Enterprise Risk Management Practices: A Case Study

2019 ◽  
Vol 10 (2) ◽  
pp. 213
Author(s):  
Hafizah Zainol Abidin ◽  
Siti Zaleha Abdul Rasid ◽  
Haliyana Khalid ◽  
Rohaida Basiruddin ◽  
Shathees Baskaran
Keyword(s):  
Risk Management ◽  
Management Practices ◽  
Gap Analysis ◽  
Enterprise Risk Management ◽  
Web Based ◽  
Enterprise Risk ◽  
Telecommunication Companies ◽  
Planning Development ◽  
Current Risk

Enterprise risk management (ERM) is used to manage, integrate and aggregate all types of risks encountered by the concerned organisation. Despite having established framework and guidelines, the implementation of ERM at divisional level seemed to be lacking. There are gaps in the actual risk management practices that need to be studied and narrowed to ensure a more effective implementation of risk management. Therefore, the objective of this study is to identify characteristics of effective risk management practices and to gauge the effectiveness level at a telecommunication company. The gaps between the actual practices and the expected practices based on twenty-four (24) identified characteristics are identified and compared upon before recommendations are made to close the gaps and further enhance the risk management practices. For the purpose of this research the self-administered, web-based questionnaires were distributed to a total number of 130 engineers who were actively involved with network infrastructure planning, development and maintenance. The feedbacks received indicated that the respondents agreed with the identified characteristics of effective risk management practices and generally agreed that the effectiveness level of current risk management practices in the company is moderate or average. Furthermore, the gap analysis based on the variances indicates that there are rooms for further improvement. The study is important for more effective risk management practices in telecommunication companies. 

Enterprise risk management: history and a design science proposal

2018 ◽  
Vol 19 (2) ◽  
pp. 137-153 ◽  
Author(s):  
Michael McShane
Keyword(s):  
Risk Management ◽  
Management Practices ◽  
Design Science ◽  
Enterprise Risk Management ◽  
Content Type ◽  
Research And Practice ◽  
Enterprise Risk ◽  
Risk Management Process ◽  
Management Concepts ◽  
Science Approach

Purpose This paper aims to investigate the evolution of enterprise risk management (ERM) out of fragmented disciplinary perspectives to provide a foundation for promoting interdisciplinary research and proposes a design science approach for more effective ERM implementation in organizations. Design/methodology/approach This conceptual paper synthesizes ERM research and practice from multiple disciplines. Findings Corporate risk management concepts were born in academic finance and developed further in the finance subset known as risk management and insurance. With the advent of ERM, efforts must broaden beyond applying statistical models to quantifiable risks. Other disciplines have expanded ERM research by embracing techniques to investigate risk management practices to produce knowledge that integrates practice and theory. ERM is promoted as integrated risk management, yet silos still remain in both practice and research. Originality/value This study provides a foundation and a proposal for moving ERM past academic and organizational silos, which is necessary to achieve the ERM philosophy and increase organizational resilience. Understanding the evolution and fragmented nature of ERM research and practice provides a foundation for interdisciplinary cooperation necessary to achieve the holistic ERM philosophy. A next frontier is effective ERM implementation. This paper argues for an organizational design science approach for mitigating the resistance to change that confounds effective implementation of ERM in organizations facing an increasingly uncertain environment and outlines future research for applying the approach to implementing the ISO 31000 risk management process.

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