Guest editorial

Martin Hiebl (Universitat Siegen, Siegen, Germany and Institute of Management Control and Consulting, Johannes Kepler University, Linz, Germany)

Management Research Review

ISSN: 2040-8269

Article publication date: 11 November 2019

Issue publication date: 11 November 2019



Hiebl, M. (2019), "Guest editorial", Management Research Review, Vol. 42 No. 11, pp. 1217-1223.



Emerald Publishing Limited

Copyright © 2019, Emerald Publishing Limited

From theoretical framing to empirical testing in risk governance research: moving the field forward

1. Background of the special issue

The recent financial crisis showed that traditional approaches to risk management could not effectively deal with the significant risks that threatened the existence of many financial institutions and other businesses. A more holistic and strategic alternative to risk management may be risk governance (Stein and Wiedemann, 2016). Risk governance at the organizational level may bridge the gap between the “institutionally oriented field of corporate governance and the methodologically oriented area of risk management” (Baule and Fandel, 2016, p. 809). While the origins of risk governance can be found in the socio-political area (Renn, 2008; van Asselt and Renn, 2011), its economic application to corporations has recently received increased attention by researchers. However, such research remains at an early stage. In particular, while some important theoretical framing of risk governance has been performed (Cohen, 2015; Stein and Wiedemann, 2016), further conceptual work is needed and empirical research on risk governance is scant so far (but see some exceptions such as Aebi et al., 2012; Agarwal and Kallapur, 2018; Lundqvist, 2015; Mongiardino and Plath, 2010; Stein and Wiedemann, 2018). Owing to this dearth of the literature, the present special issue of the management research review aims to shed more light on framing and empirically examining risk governance.

This special issue originates from the 6th Annual Conference on Risk Governance held in October 2018 at the University of Siegen, Germany and the risk governance research group at this school. Earlier editions of this conference focused on more general applications of risk governance in practice and led to a number of special issues (see the guest editorials by Baule and Fandel, 2016; Hiebl et al., 2018a, 2018b). The 2018 edition of the conference focused on the theme of this special issue and several papers presented there have been selected for publication herein.

In Section 2, I briefly introduce these papers. I then chart some avenues for future research on framing and empirically examining risk governance in Section 3. In this guest editorial’s final Section 4, I present my conclusions and acknowledgments.

2. Papers included in this special issue

After standard peer-review procedures over several rounds, four papers were selected for publication in this special issue. Two of these offer a holistic view of framing risk governance (Gotteiner et al., 2019; Stein et al., 2019), while the other two tackle specific issues in designing risk governance (Gleißner, 2019; Handschumacher et al., 2019). The four papers are, however, united in underpinning the relevance of risk governance choices and carry important implications for both research and practice.

The first conceptual paper by Stein et al. (2019) aims to raise awareness of the relevance of framing in risk management and risk governance. Based on a five-constituent framing approach, the authors conceptualize how firms’ approaches to handling risks differ depending on the frames they apply and whether they lean toward risk management or risk governance. The paper, therefore, clarifies the distinction between risk management framing and risk governance framing, which is valuable for reducing ambiguity – both in research and in practice – around these two principal approaches to steering risks.

The second conceptual paper included in this special is Gleißner’s (2019) approach to integrating enterprise risk management (ERM) with ideas from value-based management. The paper is motivated by the paradox that existing attempts to link ERM and value-based management are based on the assumption of perfect capital markets, which, however, is thwarted by numerous empirical findings in the literature indicating that the application of ERM is value-enhancing (Grace et al., 2015; McShane et al., 2011; Pagach and Warr, 2011) – a finding indicating imperfect capital markets. Gleißner (2019) describes a value-based risk management model that can circumvent this paradox. His model may, therefore, be of great value for firms wanting to better integrate risk management considerations into their strategic business decisions, and thus, be better equipped to steer the development of firm value.

Similarly, the third conceptual paper tackles a further strategic role in risk governance. Gotteiner et al. (2019) propose an “anti-aging framework” for implementing turnaround strategies based on risk governance. They argue that such a role of risk governance is vital, as turnarounds are often necessary when organizations have not sufficiently considered “higher-level” risks. They note that more strategic, risk governance-oriented thinking in turnaround situations should lead to higher chances of such turnarounds turning out successful – a notion that links risk governance to the literature on organizational failure and decline (Kücher and Feldbauer-Durstmüller, 2019).

The final paper in this special issue, authored by Handschumacher et al. (2019), investigates a specific aspect of risk governance – board interlocks. In the German two-tier system, board interlocks mean that members of the supervisory board of a given firm at the same time hold multiple positions on the supervisory and executive boards of other firms (Andres et al., 2013; Lamb and Roundy, 2016). Handschumacher et al. (2019) hypothesize that such interlocks are related to monitoring effectiveness. Based on longitudinal data from German listed firms, they find that board interlocks have both beneficial and less beneficial outcomes depending on the measure of monitoring effectiveness (e.g. excessive management pay vs pay-for-performance sensitivity). The study, therefore, indicates that board interlocks are neither “good” nor “bad” per se. However, it shows that firms need to carefully weigh the benefits and costs of board interlocks for their risk governance.

3. Suggestions for further research

The papers in this special issue offer much food for thought for further studies of risk governance. In addition to the future research directions mentioned in these papers, some overarching research needs arise from this special issue. In line with its topic, I focus on directions related to theoretical framing and directions related to empirical testing. Note that while the following suggestions for future research are certainly subjective (as is usual in such editorials, cf. Hiebl et al., 2018b; Quinn et al., 2018), it is my hope that they offer some inspiration for fellow risk governance researchers.

3.1 Alternative theoretical framings of risk governance phenomena.

Existing conceptual and empirical works on risk governance have mostly been rooted in the prior literature (Mongiardino and Plath, 2010; Stein and Wiedemann, 2016, 2018) or agency-theoretic thinking (Aebi et al., 2012; Handschumacher et al., 2019; Lundqvist, 2015; Sassen et al., 2018). In this issue, Stein et al. (2019) add that framing theory may be a useful lens through which to better understand risk governance and risk management. Besides these, a plethora of further theories are available that could enrich our understanding of risk governance and risk management. For instance, consider the various strands of institutional theory. Some qualitative research has indicated that the implementation and design of risk governance and management systems are heavily influenced by organizational politics (Arena et al., 2010, 2017; Hall et al., 2015; Lim et al., 2017). Consequently, just as with the related field of management accounting and control (Hiebl, 2018; Markus and Pfeffer, 1983), often-studied pillars of institutional studies such as power and resistance (ter Bogt and Scapens, 2019) also seem important to understand why and how risk governance is put in place. Risk governance research inspired by institutional theory could also adopt process views to better understand how existing risk governance institutions have emerged and can be changed. Also on such questions, several frameworks are available from the related field of accounting (Burns and Scapens, 2000; Quinn and Hiebl, 2018; ter Bogt and Scapens, 2019). Besides, such opportunities at the organizational level, macro-level questions on risk governance could be investigated with the help of institutional theory. For instance, it would be interesting to understand whether and how risk governance institutions in organizational fields such as certain industries or at the economic/political level are shaped and trickle down to individual organizations. Ideas from new institutional sociology (DiMaggio and Powell, 1983; Dillard et al., 2004) could guide such research and illuminate how risk governance could develop into a more widely accepted paradigm. Specific research questions include:


How are institutions around risk governance shaped in individual organizations over time? How can they be changed?


To what extent is the construction of risk governance institutions based on “rational” considerations and how far do power, politics and resistance affect the institutionalization of the concept?


How and why could risk governance become a more macro-level institution for steering risks in business organizations?

Besides such research directions rooted in institutional theory, resource-based thinking could also be applied to risk governance research. Risk governance studies leaning toward corporate governance choices (Handschumacher et al., 2019) have already drawn on resource dependence theory. Besides this theoretical framing, the resource-based view (Barney, 1991; Kraaijenbrink et al., 2010) could also be fruitfully applied to risk governance research (Stein and Wiedemann, 2016). Related research has shown that management control systems can be beneficial for developing key organizational capabilities such as innovativeness and organizational learning, which, in turn, can drive firm performance (Henri, 2006). Given that risk governance and management control share much in common and that some authors suggest that risk management is de facto an important control system (Culasso et al., 2016; Nielsen and Pontoppidan, 2019), it seems intuitive that risk governance might also influence organizational resources and capabilities significantly. This notion is underpinned by the idea that risk governance per se can be seen as a dynamic capability that could be linked to further capabilities and positive performance outcomes (Stein and Wiedemann, 2016). Specific research questions include the following:


How does risk governance affect other resources and capabilities and how is it related to organizational performance?


Under which conditions can risk governance be viewed as a dynamic capability and how does it interact with other resources and capabilities in determining an organization’s competitive advantage?

3.2 Conceptually and empirically disentangling risk governance from risk management.

While conceptual research on risk governance has tried to disentangle risk governance from other concepts such as ERM (Stein et al., 2019; Stein and Wiedemann, 2016), how these concepts can be distinguished empirically remains unclear. For instance, in her survey study of Scandinavian firms, Lundqvist (2015, p. 453) interprets risk governance as a key component of ERM that moves traditional risk management toward ERM. She operationalizes risk governance with a series of questionnaire items and archival measures, and notes that her risk governance questionnaire items “are the typical characteristics of ERM addressing the organizational and holistic nature of risk management as ERM prescribes.” Alternatively, Stein and Wiedemann (2018) suggest a measurement of risk governance based on their risk governance framework (Stein and Wiedemann, 2016). In contrast to Lundqvist (2015), their empirical approach to studying risk governance is not clearly related to ERM but involves specifically related constructs such as risk culture and the design of risk models. While the conceptual paper by Stein et al. (2019) included in this issue offers valuable propositions on how risk governance may differ from ERM because of different framing, data on how such reasoning fares in an empirical setting are lacking.

Hence, in line with this issue’s central tenet of moving risk governance research forward to empirical testing, it seems necessary at this point to use existing and potentially develops additional systematic measures of risk governance to clarify how organizations approach this paradigm, put it into practice, and distinguish it from approaches such as ERM. Interesting research questions include:


How do organizations distinguish risk governance from risk management approaches such as ERM? Do these concepts coexist in the minds of executives and supervisory bodies? If so, how are they related?


Building on the first bullet point, how can we measure risk governance in quantitative research settings such as surveys and archival studies? How would such measures compare with existing measures of ERM (Beasley et al., 2015; Lundqvist, 2015) and how can the two concepts be disentangled in empirical research?

4. Concluding comments and acknowledgments

As indicated above, research on risk governance is still in a relatively early stage, and thus, numerous attractive opportunities for future research remain, some of which are indicated above. Nonetheless, the papers included in this special issue bolster our understanding of risk governance and it is hoped that related research will follow suit.

Many actors contributed to the construction of this special issue. First, I would like to thank Lerong He and Jay J. Janney, coeditors of the management research review, for their support. Second, I thank my colleagues Volker Stein and Arnd Wiedemann for their diligent organization of the annual conference on risk governance in Siegen, which kick-started the development of this special issue. Also, I would like to thank the many reviewers for devoting significant amounts of time to providing constructive and cogent reviews, including:

  • Rainer Baule, University of Hagen, Germany.

  • Alexandra Bertschi-Michel, University of Bern, Switzerland.

  • Evelyn Braumann, Aarhus University, Denmark.

  • Carlos Fernandez Mendez, University of Oviedo, Spain.

  • Manu Gupta, Virginia Commonwealth University, USA.

  • Christian Huber, Helmut Schmidt University, Germany.

  • Txomin Iturralde, University of the Basque Country, Spain.

  • Alasdair Marshall, University of Southampton, UK.

  • Robert Obermaier, University of Passau, Germany.

  • Jana Oehmichen, University of Groningen, the Netherlands.

  • Ferdinand Othieno, Strathmore University, Kenya.

  • Marius Pretorius, University of Pretoria, South Africa.

  • Inaie Santos, Institute for Advanced Sustainability Studies Potsdam, Germany.

  • Ivo Schedlinsky, University of Bayreuth, Germany.

  • Friedrich Sommer, University of Bayreuth, Germany.

  • Sof Thrane, Copenhagen Business School, Denmark.

  • Jean-Pierre van der Rest, Leiden University, the Netherlands.

  • Liz Warren, University of Greenwich, UK.

Finally, it is, of course, the authors of the insightful research papers that have made this special issue possible. They invested much time and thought in creating and improving their research with the help of reviewers and editorial comments. I remain confident that the payoff of their endeavors is not “at risk,” but will materialize in an increased understanding of theoretically framing and empirically testing aspects of risk governance.


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