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Article
Publication date: 1 October 2007

A.C. Venter

The high occurrence of procurement fraud requires the management of an enterprise, the risk manager of the enterprise and the internal auditor to address procurement fraud…

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1867

Abstract

The high occurrence of procurement fraud requires the management of an enterprise, the risk manager of the enterprise and the internal auditor to address procurement fraud risks effectively within the enterprise risk management concept. The purpose of the article is to explain a procurement fraud risk management process which will serve as a comprehensive framework for enterprise risk managers and for internal auditors to limit the enterprise’s exposure to procurement fraud as far as possible. The study by Venter (2005) on which the article is based proposes a procurement fraud risk matrix which can be used to manage fraud risks within the procurement function efficiently. This matrix is based on the Committee of Supporting Organizations of the Treadway Commission’s (COSO’s) Enterprise Risk Management ‐Integrated Framework which is specifically applied to address the procurement fraud risk problem.

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Meditari Accountancy Research, vol. 15 no. 2
Type: Research Article
ISSN: 1022-2529

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Book part
Publication date: 2 September 2020

Serdar Ogel, Adem Boyukaslan and Semih Acikgozoglu

The present study aims to reveal knowledge, report on perception level and look at the evaluation of exchange rate risk management techniques of enterprises registered to…

Abstract

The present study aims to reveal knowledge, report on perception level and look at the evaluation of exchange rate risk management techniques of enterprises registered to Afyonkarahisar Chamber of Commerce and Industry. In order to achieve this, the authors conducted a study that included a field-survey and consisted of 223 enterprises that have foreign trade transactions in Afyonkarahisar city. The data that were used in the analysis had been collected via a survey and they were statistically evaluated by SPSS program.

Within the scope of the study, the authors investigated the determination of corporational identity of the sampled manufacturing enterprises, organisational structure of finance departments, determination of ownership structures of these enterprises, determination of foreign exchange risk perceptions, classification of exchange rate risks according to industry type and the determination of risk management instruments such as internal and external hedging strategies and information and usage levels of derivative instruments.

The most important result obtained in the study is that the majority of the companies, which operate in a competitive environment, are intensely exposed to foreign exchange risk but try to overcome the foreign exchange risk using traditional internal firm-level hedging methods instead of well-reputed external hedging methods or derivative instruments. Firms declared to be out of knowledge – by any means – for derivative instruments as the main reason for not utilising a well-reputed external foreign exchange risk management techniques.

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Contemporary Issues in Business Economics and Finance
Type: Book
ISBN: 978-1-83909-604-4

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Article
Publication date: 1 January 2006

Steve G. Sutton

Purpose – This article aims to focus on raising awareness of the limitations of traditional “enterprise‐centric” views of enterprise risk management that ignore the risks

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6689

Abstract

Purpose – This article aims to focus on raising awareness of the limitations of traditional “enterprise‐centric” views of enterprise risk management that ignore the risks that are inherited from key business and supply chain partners. In essence, enterprise systems implementations have allowed organizations to couple their operations more tightly with other business partners, particularly in the area of supply chain management, and in the process enterprise systems applications are redefining the boundaries of the entity in terms of risk management concerns and the scope of financial audits. Design/methodology/approach – The prior literature that has begun to explore aspects of assessing key risk components in these relationships is reviewed with an eye to highlighting the limitations of what is understood about risk in interorganizational relationships. This analysis of the prior research establishes the basis for the logical formation of a framework for future enterprise risk management research in the area of e‐commerce relationships. Findings – Conclusions focus on the overall framework of risks that should be considered when interorganizational relationships are critical to an enterprise's operations and advocate an “extended‐enterprise” view of enterprise risk management. Research limitations/implications – The framework introduced in this paper provides guidance for future research in the area of interorganizational systems control and risk assessment. Practical implications – The framework further highlights areas of risk that auditors and corporate risk managers should consider in assessing the risk inherited through interorganizational relationships. Originality/value – The paper highlights the need to shift from an enterprise‐centric view of risk management to an extended‐enterprise risk management view.

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Journal of Enterprise Information Management, vol. 19 no. 1
Type: Research Article
ISSN: 1741-0398

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Article
Publication date: 5 March 2010

Peng‐fei Wang, Shi Li and Jian Zhou

The purpose of this paper is to explore whether financial risk management (FRM) can improve enterprise value in China's current economic environment.

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2118

Abstract

Purpose

The purpose of this paper is to explore whether financial risk management (FRM) can improve enterprise value in China's current economic environment.

Design/methodology/approach

A theoretical model is constructed which decomposes firms by different combinations expressed by cash flow and risk scale. Then, regression testing is conducted, taking the non‐ferrous metal industry in Shanghai and Shenzhen Stock Exchanges (2002‐2008) as the sample, and using the fixed effects model.

Findings

The results support the hypothesis that risk management can raise enterprise value. It is also found that risk management behavior has different representations among firms with different characteristics.

Originality/value

This paper has modified Boyer's mean‐variance model and then testified to the effectiveness of FRM. It also explores the influence of enterprise characteristics on the efficiency of risk management, providing some theoretic support for China's enterprises, which could borrow ideas from successful experience.

Details

Nankai Business Review International, vol. 1 no. 1
Type: Research Article
ISSN: 2040-8749

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Article
Publication date: 15 August 2019

Hossam Elamir

The growing importance of risk management programmes and practices in different industries has given rise to a new risk management approach, i.e. enterprise risk management

Abstract

Purpose

The growing importance of risk management programmes and practices in different industries has given rise to a new risk management approach, i.e. enterprise risk management. The purpose of this paper is to better understand the necessity, benefit, approaches and methodologies of managing risks in healthcare. It compares and contrasts between the traditional and enterprise risk management approaches within the healthcare context. In addition, it introduces bow tie methodology, a prospective risk assessment tool proposed by the American Society for Healthcare Risk Management as a visual risk management tool used in enterprise risk management.

Design/methodology/approach

This is a critical review of published literature on the topics of governance, patient safety, risk management, enterprise risk management and bow tie, which aims to draw a link between them and find the benefits behind their adoption.

Findings

Enterprise risk management is a generic holistic approach that extends the benefits of risk management programme beyond the traditional insurable hazards and/or losses. In addition, the bow tie methodology is a barrier-based risk analysis and management tool used in enterprise risk management for critical events related to the relevant day-to-day operations. It is a visual risk assessment tool which is used in many higher reliability industries. Nevertheless, enterprise risk management and bow ties are reported with limited use in healthcare.

Originality/value

The paper suggests the applicability and usefulness of enterprise risk management to healthcare, and proposes the bow tie methodology as a proactive barrier-based risk management tool valid for enterprise risk management implementation in healthcare.

Details

Business Process Management Journal, vol. 26 no. 3
Type: Research Article
ISSN: 1463-7154

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Article
Publication date: 1 December 2021

Weige Yang, Yuqin Zhou, Wenhai Xu and Kunzhi Tang

The purposes are to explore corporate financial management optimization in the context of big data and provide a sustainable financial strategy for corporate development.

Abstract

Purpose

The purposes are to explore corporate financial management optimization in the context of big data and provide a sustainable financial strategy for corporate development.

Design/methodology/approach

First, the shortcomings of the traditional financial management model are analyzed under the background of big data analysis. The big data analytic technology is employed to extract financial big data information and establish an efficient corporate financial management model. Second, the deep learning (DL) algorithm is applied to implement a corporate financial early-warning model to predict the potential risks in corporate finance, considering the predictability of corporate financial risks. Finally, a corporate value-centered development strategy based on sustainable growth is proposed for long-term development.

Findings

The experimental results demonstrate that the financial early-warning model based on DL has an accuracy of 90.7 and 88.9% for the two-year financial alert, which is far superior to the prediction effect of the traditional financial risk prediction models.

Originality/value

The obtained results can provide a reference for establishing a sustainable development pattern of corporate financial management under the background of big data.

Details

Journal of Enterprise Information Management, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1741-0398

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Book part
Publication date: 4 May 2021

Valdonė Darškuvienė, Vilma Nasteckienė and Edvinas Samys

This chapter aims to advance the debate on enterprise risk management (ERM) frameworks within different contexts. We discuss the economic, business and regulatory…

Abstract

This chapter aims to advance the debate on enterprise risk management (ERM) frameworks within different contexts. We discuss the economic, business and regulatory environments that set the framework for company risk management practices in Lithuania while contrasting ERM features at the company level. ERM practices are examined using two company cases – a private business company and a state-owned enterprise (SOE), and evidence is based on interviews with their management, as well as their documentation. The findings indicate the co-existence of a functional vs systematic approach to risk management. Moreover, evidence supports the notion of the shifting of risk management from a functional risk management approach to a systematic approach within risk portfolio management. We assume that risk management is a conceptualized subject of management and research, with a rather weak connection with enterprise goals and operations.

Details

Enterprise Risk Management in Europe
Type: Book
ISBN: 978-1-83867-245-4

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Book part
Publication date: 4 May 2021

Irma Malafronte and John Pereira

Companies face a wide number of risks and need to have in place appropriate measures and techniques to be able to identify, manage, and monitor risks. Risk management is a…

Abstract

Companies face a wide number of risks and need to have in place appropriate measures and techniques to be able to identify, manage, and monitor risks. Risk management is a fundamental responsibility of the corporate governance structure of an organization; it means managing all risks on a holistic basis, all together rather than just one, through an appropriate and systematic process. This chapter provides an overview of enterprise risk management in the United Kingdom. It presents key information on the economic system of the United Kingdom, emphasizing the role of small and medium enterprises, and presents country macroeconomic highlights. It provides a summary of regulation, practices, and authorities; it presents the key milestones of the regulation on corporate governance and reporting in the United Kingdom, and stresses the importance of corporate governance mechanism in companies' enterprise risk management practices. Further, it discusses the importance of transparency and disclosure in the context of enterprise risk management, specifically the relevance of risk management and internal control related disclosure in the annual reports and accounts. Finally, it reviews the growing academic research on enterprise risk management and previous studies on risk disclosure practices in companies' reports.

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Article
Publication date: 13 August 2019

Rafael Almeida, José Miguel Teixeira, Miguel Mira da Silva and Paulo Faroleiro

The purpose of this paper is to ease the ISO 31000 standard understanding and provide mechanisms that allow organizations to adopt and adapt this standard to their reality.

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1341

Abstract

Purpose

The purpose of this paper is to ease the ISO 31000 standard understanding and provide mechanisms that allow organizations to adopt and adapt this standard to their reality.

Design/methodology/approach

The research methodology adopted in this research was the design science research methodology.

Findings

Key finding is that enterprise architecture (EA) models and EA tools can help reduce the complexity of the ISO 31000 standard and improve the communication between stakeholders.

Practical implications

The research proposal serves the purpose of supporting the evidence collection for an enterprise risk management (ERM) initiative in an as-was, as-is, or to-be perspective.

Originality/value

Traditional ERM efforts operate on silos, limiting the sharing of risk information and the achievement of an organization-wide view of risks. EA can provide a common way to model complex business systems, from the strategic level to implementation details. This paper proposes the use of an EA model and an EA tool (Atlas) to represent ISO 31000, allowing a better understanding on the value of assets that can be affected from the manifestation of some risks over time.

Details

Journal of Enterprise Information Management, vol. 32 no. 5
Type: Research Article
ISSN: 1741-0398

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Article
Publication date: 7 November 2019

Werner Gleißner

This paper aims to present the combination of enterprise risk management (ERM) and value-based management as especially suitable methods for companies with a shareholder…

Abstract

Purpose

This paper aims to present the combination of enterprise risk management (ERM) and value-based management as especially suitable methods for companies with a shareholder value imperative. Among its major benefits, these methods make the contribution of risk management for business decisions more effective.

Design/methodology/approach

Any possible inconsistencies between ERM, generating value because of imperfect capital markets and the CAPM to calculate cost of capital, which assumes perfect markets, must be avoided. Therefore, it is imperative that valuation methods used are based on risk analysis, and thus do not require perfect capital markets.

Findings

Value-based risk management requires the impact of changes in risk on enterprise value to be calculated and the aggregation of opportunities and risks related to planning to calculate total risk (using Monte Carlo simulation) and valuation techniques that reflect the effects changes in risk, on probability of default, cost of capital and enterprise value (and do not assume perfect capital markets). It is recommended that all relevant risks should be quantified and described using adequate probability distributions derived from the best information.

Practical implications

This approach can help to improve the use of risk analysis in decision-making by improving existing risk-management systems.

Originality/value

This extension of ERM is outlined to provide risk-adequate evaluation methods for business decisions, using Monte Carlo simulation and recently developed methods for risk–fair valuation with incomplete replication in combination with the probability of default. It is shown that quantification of all risk using available information should be accepted for the linking of risk analysis and business decisions.

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