An institutional analysis of the risk management process during the COVID-19 pandemic: evidence from an emerging market

Abstract

Purpose This study aims to investigate the institutional changes brought about by the COVID-19 pandemic on the Bahraini insurance sector. This study also examines how those changes affected the risk management practices. Design/methodology/approach This study deploys a qualitative methodology with a case study design. The data are collected from multiple sources such as semi-structured interviews, documents and website analyses. Findings The COVID-19 pandemic has resulted in an institutional change in the Bahraini insurance sector. Pre-COVID-19, the professional logic was the dominant institutional logic. Then, the COVID-19 pandemic and its related uncertainties made the economic logic the most dominant logic. Accordingly, risk officers are currently responding to the crisis by being more risk-averse than risk managers. This study presents an inclusive institutional understanding of risk management as informed by the professional logic and socio-political and economic logics. Practical implications This study has implications for regulators and insurance customers by giving a snapshot of how insurers’ risk officers respond to the COVID-19 pandemic, which can help envisage their plans and actions. Originality/value This study contributes to risk management and institutional logics literature by illustrating how changes in risk management practices in emerging markets are an operational manifestation of sustaining profits and maintaining the positions of risk officers. This extends the risk management literature by bringing early evidence from an emerging market regarding risk officers’ behaviours and control plans during the COVID-19 pandemic. Moreover, this study extends the institutional logics literature by exploring the micro-level impacts of logics in an emerging insurance market.

Towards an institutional understanding of risk-based management controls: evidence from a developing market

“…The use of “institutional multiplicity” is vital to recognising how the change in a particular institution can be fully identified and evaluated only in the context of other institutions (Metwally and Diab, 2021). It assumes that individuals’ and organisations’ interests, identities, values and assumptions are incorporated within the dominant institutional logics in the examined field (Metwally and Diab, 2023; Thornton et al , 2012).…”

“…Risk management (RM) has become a broadly diffused set of practiced routines in today’s industries (Power, 2016). The concept of RM has emerged as a centre in management practices, and risk officers’ role in corporate charts has become vital (Metwally and Diab, 2023). Besides, governance and control practices have become unthinkable without reference to RM (Bhimani, 2009).…”

Institutional Pressures and Environmental Management Accounting Adoption: Do Environmental Strategy Matter?

“…Further, it explains that companies are integrated into a system of shared values, standards, conventions, and beliefs that determine acceptable behavior. These societal structures, or institutions, become ingrained over time and provide validated models for action [22,56]. To increase their chances of survival, managers often adapt to these institutions, aligning their practices with social expectations to gain legitimacy [36,57,58].…”

“…In the domain of institutional theory, the integration of EMA within corporate frameworks is subject to the exertion of COP, NOP, and MIP [5,7,35,55,60,65]. Despite the initial presumption of these pressures facilitating organizational change, scholarly investigations underscore the prevalent occurrence of decoupling as a strategic response to IP [13,22,51,56,66,67]. Decoupling manifests when these pressures fail to catalyze or expedite transformative processes, particularly in contexts where internal social norms or the lack of robust exemplars attenuate the impact of COP [22,51].…”

“…Decoupling manifests when these pressures fail to catalyze or expedite transformative processes, particularly in contexts where internal social norms or the lack of robust exemplars attenuate the impact of COP [22,51]. Regrettably, such circumstances often engender nominal effects on change endeavors or even adversarial ramifications on overall organizational performance, as entities resort to covert resistance and superficial adherence to perpetuate the existing operational paradigms [13,22,51,56,66,67].…”