The Revolution in Corporate Risk Management: A Decade of Innovations in Process and Products

Abstract

The explosion of corporate risk management programs in the early 1990s was a hasty and ill-conceived reaction by U.S. corporations to the great "derivatives disasters" of that period. Anxious to avoid the fate of Barings and Procter & Gamble, most top executives were more concerned about crisis management than risk management. Many companies quickly installed (often outrageously priced) value-at-risk (VaR) systems without paying much attention to how such systems fit their specific business requirements. Focused myopically on loss avoidance and technical risk measurement issues, the corporate risk management revolution of the '90s thus got underway in a disorganized, "ad hoc" fashion, producing a curious amalgam of policies and procedures with no clear link to the corporate mission of maximizing value. 2002 Morgan Stanley.

Risk Management and Enterprise Risk Management

“…Additionally, ERM attempts to consolidate the risk management process across all the levels within the organization (COSO 2004) and concerns not only an organization's view of the risks that it faces, but also the degree of coordination and consolidation with which the company manages the risks (Culp 2002).…”

Insight into the development of risk management practices in Poland

“…This new perception of risk management is referred to as enterprise-wide risk management (hereafter ERM). As opposed to the 'silo' risk management approach, ERM postulates consolidation and integration of the process by which an organisation manages its risks (see Culp, 2002;Liebenberg and Hoyt, 2003;Walker et al, 2003;Beasley et al, 2005;Chapman, 2006;Lam, 2006). Dionne (2013, p. 153) argues that in the late 1990s risk management underwent reorientation in a managerial context.…”

“…Since then, risk management ideas have been constantly evolving, offering new instruments and new approaches. The latest evolution is tied to the emergence of the concept of enterprise-wide risk management, which was born at the beginning of the 1990s (according to Culp, 2002). It is worth noting that at that time Poland was about to start the process of transition, struggling with its economic consequences.…”

The specificity and typology of dynamic management studies

“…The historical approach, aiming at the evolution of certain managerial elements from an investigated area over a certain period, which can vary over very wide limits. The most frequent approaches are those which compare managerial evolutions over a few years (two to three), where the evolutions often have a pragmatic character (Peters and Waterman, 1982;Nicolescu and Verboncu, 1994;Foster and Kaplan, 2001;Culp, 2002;Joyce et al, 2003;Kettl, 2005;van Vugt, 2006;Powell, 2007;King et al, 2009;Le Clair and Moore, 2009;Vaughn et al, 2009;Cosenz, 2010;Ofek and Wathieu, 2010;Farhoomand, 2012). Usually, managers who use this approach aim to highlight managerial progress and performances obtained, and often compare these with the obligations outlined in their management contracts or in relation to the strategies and policies of their organizations.…”

“…Usually, managers who use this approach aim to highlight managerial progress and performances obtained, and often compare these with the obligations outlined in their management contracts or in relation to the strategies and policies of their organizations. In recent decades some studies have emerged that look at longer periods, aiming essentially to identify new changes and trends (Nicolescu and Verboncu, 1994;Culp, 2002;Kettl, 2005;van Vugt, 2006;Powell, 2007;King et al, 2009;Le Clair and Moore, 2009;Vaughn et al, 2009;Cosenz, 2010;Ofek and Wathieu, 2010;Farhoomand, 2012). This type of research, which has been conducted mostly by academics, researchers and consultants from large firms, has contributed significantly to the development of management science and its professionalization.…”