The drivers and value of enterprise risk management: evidence from ERM ratings

Bohnert, Alexander; Gatzert, Nadine; Hoyt, Robert; Lechner, Philipp

doi:10.1080/1351847x.2018.1514314

Cited by 66 publications

(93 citation statements)

References 44 publications

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“…Larger firms are more likely to implement an ERM program than smaller firms (Bohnert et al, 2018;Baxter, Bedard, Hoitash & Yezegel, 2013;Pagach & Warr, 2011;Hoyt & Liebenberg, 2011). Larger firms have more resources to implement an ERM program whose implementation by itself is costly.…”

Section: Firm Sizementioning

confidence: 99%

“…Financial risk is enhanced with greater financial leverage . Firms that are optimistic about their risk management program may tend to increase their financial leverage since they are confident to face negative uncertainties (Bohnert et al, 2018;Hoyt & Liebenberg, 2011). Greater leverage increases the chances of financial distress with the likelihood of implementing an ERM program (Pagach & Warr, 2011).…”

Section: Financial Leveragementioning

confidence: 99%

“…Greater leverage increases the chances of financial distress with the likelihood of implementing an ERM program (Pagach & Warr, 2011). Bohnert et al (2018), Hoyt & Liebenberg (2011) empirically established a significant negative impact of leverage on ERM implementation. However, Golshan & Rasid (2012) espoused that firms with higher financial leverage are more likely to have an ERM in place.…”

Section: Financial Leveragementioning

confidence: 99%

“…Improved risk management practices may also lead firms to reduce the level of financial slack (Pagach & Warr, 2010). Financial slack is not a significant determinant for ERM implementation (Bohnert et al, 2018). The researcher, therefore, hypothesizes that:…”

Section: Financial Slackmentioning

confidence: 99%

“…Research direction on the concept is still at an infancy stage (Bromiley, Mcshane, Nair & Rustambekov, 2015). It has mostly been directed to the factors driving its implementation (Aleisa, 2018;Bohnert, Gatzert, Hoyt & Lechner, 2018;Gatzert & Martin, 2015) and its relationship with firm performance (Anton 2018;Bohnert et al, 2018;Alawattegama 2018;Sayilir & Farhan 2017) with mixed results. provided for appropriate risk awareness, behavior, and judgment about risk-taking Financial Stability Board (FSB, 2014).…”

Section: Introductionmentioning

confidence: 99%

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The Role of Risk Culture in Enterprise Risk Management Implementation

Kanu¹

2020

IJBM

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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.

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Section: Firm Sizementioning

confidence: 99%