Why do firms adopt enterprise risk management (ERM)? Empirical evidence from France

Abstract

Purpose Enterprise risk management (ERM) is a risk management approach that calls for integrating all the organization-wide risks and takes a portfolio view point of managing organizational risks. The purpose of this paper is to investigate the factor that influence a firm’s decision to adopt ERM. Design/methodology/approach The authors employ a particular technique of survival data analysis, the Cox proportional hazards model, to investigate the factors that lead towards the decision of initiating an ERM programme. The authors constructed a unique sample of French firms derived from the information in 315 corporate news announcements for the hiring of a chief risk officer and information retrieved from publicly available annual reports to identify firms that initiated an ERM programme, over the period from year 1999 to 2008. Findings The results suggest that besides the growing international and local regulatory pressure, factors that are internal to the organizations like the expected probability of financial distress and its explicit and implicit costs, poor earnings performance and the existence of growth opportunities play vital role in motivating firms to adopt ERM. It was also found that corporate governance practices such as the independence of the board may also lead towards an initiation of the ERM. Originality/value This study makes theoretical and methodological contribution the ERM literature by employing a novel methodology and presenting empirical evidence based on data form French firms.

Enterprise Risk Management Practices and Firm Performance, the Mediating Role of Competitive Advantage and the Moderating Role of Financial Literacy

“…SMEs, due to the lack of management capabilities and lack of resources, are more likely focused on ERM practices. In fact, ERM practices enable a firm to reduce different types of costs associated with firms' operational and non-operational activities (Khan et al 2016). However, in contrast, many small firms are unable to support risk management activities due to lack of resources and capabilities (Brustbauer 2016).…”

The Factors Influencing The Enterprise Risk Management Practices and Firm Performance in Jordan and Malaysia

“…ERM has a positive influence on firm performance (Callahan and Soileau 2017). ERM practices let companies to reduce various types of costs related to companies' operational and non-operational activites (Khan et al 2016). Berry-Stölzle & Xu (2018) showed that ERM is not limited to cost reduction, still it is associated with many strategic positions for companies that might directly or indirectly affect company results also.…”

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“…На открытых горных рабо тах рост объемных показателей достигался повышением производительности горнотранспортного оборудования (экскаваторов и самосвалов) (рис. 3,4,5). Рис 12 МАРТ, 2020, "УГОЛЬ" РЕГИОНЫ Ускоренная отработка запасов требует значительных усилий для их своевременной подготовки.…”

“…Конструктивно анкеры АК01-25 имеют ряд отличий от применя емых анкеров АК01. Кроме увеличенной несущей способности до 250 кН их главным преимуществом является возможность приме нения гайки-подвеса, что позволяет использовать анкеры для уси ления крепи горной выработки в сочетании с креплением подвес ной монорельсовой дороги [4].…”

“…Рост выработки на одну среднесписочную авто-тонну за рассматриваемый период составил 1,9 раза. Дальнейший рост эффективности использования автотранспорта мо жет быть обеспечен путем организации процесса непре рывных организационно-технологических улучшений и вовлечения в него руководителей, специалистов и опера ционного персонала [3,4]. Как показал опыт осуществлен ных улучшений, их эффективность составляет до 20 руб.…”