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

Adoption of enterprise risk management (ERM) in small and medium-sized enterprises: evidence from Malaysia

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Consilz Tan ◽  
Su Zy Lee
Keyword(s):  
Risk Management ◽  
Best Practices ◽  
Business Environment ◽  
Risk Tolerance ◽  
Enterprise Risk Management ◽  
Risk Governance ◽  
Success Factor ◽  
Content Type ◽  
Enterprise Risk ◽  
Risk Appetite

Purpose The critical success factor of enterprises is the ability to identify risks and subsequently adapt to the ever-changing technology, as well as the business environment. This paper aims to investigate the top risks faced by small and medium-sized enterprises (SMEs). In the meantime, this paper outlines the perspectives on enterprise risk management (ERM)-based best practices and the adoption level of ERM practices in SMEs. Design/methodology/approach A mixed methodology was used to collect a comprehensive understanding of the adoption of ERM, especially in SMEs. The research is based on cross-sectional questionnaires and collected from risk practitioners in Malaysia. Detailed analysis of the top risks and best practices presented in this paper to identify the developments of risk management in changing organizations. This study used chi-square tests to examine the distribution of the adoption of the ERM programme using risk and insurance management society risk maturity model attributes. Logit regression was used to test the association of ERM efforts with the probability of adopting/considering ERM practices. Findings The findings indicated that business interruption risk and economic slowdown risk are the major concern for companies in Malaysia. A business continuity plan was found to be the most common risk management practice. Efforts such as the establishment of a risk management team and the development of risk appetite and/or risk tolerance statements in an organization are associated with the probability of adopting/considering ERM practices. Research limitations/implications This paper helps to identify challenges of implementing risk governance and management in SMEs that shed light on the regulatory setting which we rather know a little about its impacts. Originality/value There are limited studies conducted in emerging countries on ERM and the application of the ERM framework in SMEs. Prior research studies are mostly generalized and lack details of risk management strategies applying to specific risks. This paper successfully examined the low maturity level of ERM practices and how SMEs in Malaysia managed those risks that emerged in their organizations.

scholarly journals Enterprise Risk Management and Risk Culture in Construction Public Listed Companies

2021 ◽  
Vol 26 (2) ◽  
pp. 17-36
Author(s):  
Ching Ching Wong ◽  
Faizul Azli Mohd Rahim ◽  
Siaw Chuing Loo
Keyword(s):  
Risk Management ◽  
Listed Companies ◽  
Two Dimensions ◽  
Enterprise Risk Management ◽  
Annual Reports ◽  
Top Management ◽  
Risk Manager ◽  
Enterprise Risk ◽  
Risk Appetite ◽  
Risk Culture

Inadequate risk management and lack of risk culture can expose a company to unexpected risk events, which can negatively affect its performance. However, there are inconsistencies in suitable dimensions to measure the enterprise risk management (ERM) construct, as well as insufficient embedding strategies for risk culture. This study aims to identify the ERM practices and risk culture dimensions among the Malaysian construction public listed companies (PLCs). The roles of top management and chief risk officer/risk manager in influencing ERM and risk culture are also explored. A total of 46 annual reports and 10 interviews of industry practitioners were analysed using content analysis. The analysis of the annual reports found that risk policy and risk appetite/tolerance, monitoring key risk and accountability are the three dimensions of risk culture. In addition, based on the interviews, reward and recognition and internal relationships were identified as the two dimensions of risk. Top management and risk manager were found to be the primary drivers of ERM programme and risk culture in construction PLCs. The results of this study are used to formulate a survey instrument for the subsequent data collection to test the proposed theoretical model.

Enterprise risk management and Solvency II: the system of governance and the Own Risk and Solvency Assessment

2020 ◽  
Vol 21 (4) ◽  
pp. 317-332 ◽  
Author(s):  
Pablo Durán Santomil ◽  
Luis Otero González
Keyword(s):  
Risk Management ◽  
Insurance Industry ◽  
Solvency Ii ◽  
Enterprise Risk Management ◽  
Insurance Companies ◽  
Legal Form ◽  
Content Type ◽  
Enterprise Risk ◽  
Solvency Assessment

Purpose The purpose of this paper is to analyze how enterprise risk management (ERM), the system of governance and the Own Risk and Solvency Assessment (ORSA) have been boosted with the entry of Solvency II. Design/methodology/approach For this analysis, the authors have undertaken a survey of chief risk officers (CROs) working in Spanish insurance companies. Findings The results show that Solvency II has definitely promoted ERM in the European insurance industry and improved the system of governance of the insurance companies, and that the perceived value of the ORSA for the companies is higher than the cost. It is clear that the quality of ERM implemented by companies is higher in those that face more complex risks and with greater interdependencies – that is, larger companies, foreign insurers and insurers with several lines of business – but is unaffected by the legal form of the entity (mutual/corporation). Originality/value This study conducts primary research with surveys of CROs and develops a measure of the quality of ERM implemented by insurance companies.

Enterprise risk management for health insurance from an actuarial perspective

2012 ◽  
Vol 17 (2) ◽  
pp. 259-314 ◽  
Author(s):  
G. C. Orros ◽  
J. Smith
Keyword(s):  
Risk Management ◽  
Health Insurance ◽  
Solvency Ii ◽  
Enterprise Risk Management ◽  
Insurance Companies ◽  
Enterprise Risk ◽  
The Face ◽  
Known Unknowns ◽  
Over Time ◽  
Health Insurers

AbstractThis paper focuses on Enterprise Risk Management (ERM) and strategic business management for health insurance companies in our world of ‘unknown unknowns’ and the emergence of unexpected risks over time. It illustrates how Chief Risk Officers (CROs) can focus on ‘risk and opportunity management’ through an ERM framework, and thereby balance risks against opportunities, whilst being resilient against ‘unknown unknowns’ and their emergence over time as ‘known unknowns’ and ‘known knowns’. The paper has been designed to meet the broad requirements of health insurers that would like to implement an ERM framework for the effective risk management of their health insurance lines of business. Risk management for health insurers in the context of Solvency II and broader European Commission regulatory requirements is also discussed. The authors discuss how insurers can develop and apply risk management to build resilience in the face of the storms and shocks that may lie ahead.

scholarly journals Creating Value Through Enterprise Risk Management

2011 ◽  
Vol 25 (3) ◽  
Author(s):  
Frantz Maurer
Keyword(s):  
Risk Management ◽  
Financial Markets ◽  
Enterprise Risk Management ◽  
Strategic Decision ◽  
Management Systems ◽  
Management Approach ◽  
Financial Risks ◽  
Fully Integrated ◽  
Enterprise Risk ◽  
Integrated Risk

The traditional risk management approach has been characterized as a highly disaggregated method of managing financial risks. Recently, risk management has evolved from a narrow, insurance based view to a holistic; all risk encompassing view, commonly termed Enterprise Risk Management (ERM). Financial risks are inherent in financial markets and their management represents one of the main tasks in the business of financial institutions. Enterprise Risk Management enables management to effectively deal with uncertainty and associated risk and opportunity, enhancing the capacity to build value. In contrast to the existing finance literature, this paper emphasizes the practical issues related to the adoption of an ERM framework for strategic decision-making in banks. The aim is to provide an extensive guide to the implementation issues faced by banks that are in the process of implementing fully integrated risk management systems and capabilities.

The Role of Construal Alignment in Enterprise Risk Management

2021 ◽  
Author(s):  
Xin Liu ◽  
Bernard Wong-On-Wing
Keyword(s):  
Risk Management ◽  
Mental Representations ◽  
Construal Level Theory ◽  
Enterprise Risk Management ◽  
Risk Indicators ◽  
Management Philosophy ◽  
Enterprise Risk ◽  
Risk Appetite ◽  
Safety Case

According to the Committee of Sponsoring Organizations (COSO 2017), two important elements of an organization’s enterprise risk management (ERM) framework are its risk management philosophy, and its risk appetite and tolerance. Based on Construal Level Theory (CLT), we posit that the effectiveness of ERM depends on the extent of alignment (non-fit or fit) between mental representations (high versus low construal) of those two ERM elements. We test our hypothesis across two risk cases: safety and confidentiality. Results of our experiment suggest that employees are more proactive when there is a construal fit between the emphasis placed on a firm’s risk management philosophy and its expression of the key risk indicators (KRIs). This benefit is observed in the confidentiality case, but not in the safety case. Implications are discussed.

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