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Article
Publication date: 28 June 2021

Scott Dellana, William J. Rowe and Ying Liao

The purpose of this research is to develop a validated general measure of supply chain risk management maturity (SCRMM) to assess organizational risk management maturity

Abstract

Purpose

The purpose of this research is to develop a validated general measure of supply chain risk management maturity (SCRMM) to assess organizational risk management maturity in the context of the supply chain (SC).

Design/methodology/approach

Dimensions and statements measuring SCRMM were developed through a literature review and consultation with experts. The instrument was refined through a pilot study and a full-scale study of 140 SC managers in the USA. A final SCRMM instrument, consisting of 25 statements, was obtained through scale purification, exploratory factor analysis, reliability analysis, and confirmatory factor analysis of construct validity. Cluster analysis was conducted to characterize the organizational groupings with respect to the instrument dimensions.

Findings

SCRMM was found to be comprised of the three main dimensions of SC Risk Management Orientation, Enterprise Risk Management Integration (ERMI), and SC Risk Collaboration. ERMI was found to be comprised of the three sub-dimensions of SC Risk Mitigation, Improvement of Risk Management Processes, and Organization Internal Risk Management. Cluster analysis revealed three groups characterized according to SCRMM as leaders, followers, and laggards.

Research limitations/implications

The findings are based on a sample in the USA, so the SCRMM scale may not generalize to supply chains in other countries or geographic regions.

Practical implications

The instrument provides a self-assessment and benchmark tool for businesses to advance their SC risk management through different stages of maturity.

Originality/value

This is a pioneering general instrument that treats risk management maturity of the organization in the context of the SC. Participants span many industries and SC positions.

Details

Benchmarking: An International Journal, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1463-5771

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Article
Publication date: 16 May 2016

Xianbo Zhao, Bon-Gang Hwang and Sui Pheng Low

The purpose of this paper is to develop a knowledge-based decision support system for enterprise risk management (KBDSS-ERM) for Chinese construction firms (CCFs) to…

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Abstract

Purpose

The purpose of this paper is to develop a knowledge-based decision support system for enterprise risk management (KBDSS-ERM) for Chinese construction firms (CCFs) to facilitate their ERM implementation. The specific objectives of the KBDSS-ERM are: first, assess the ERM maturity in a CCF; second, visualize the ERM maturity assessment results; third, provide action plans for improving the ERM implementation along the maturity continuum; and finally, generate a printable ERM maturity assessment report.

Design/methodology/approach

Microsoft Visual Studio 2010 was used to develop the KBDSS-ERM. Based on literature review and structured interviews, 191 action plans for improving ERM implementation were identified and included in the knowledge base. A fuzzy ERM maturity model, including 16 maturity criteria and 66 best practices, was embedded into the KBDSS-ERM. A total of ten experts from ten different CCFs, who were not involved in the survey or the development of the action plans, were invited to validate the KBDSS-ERM.

Findings

The validation results indicated that the results of the KBDSS-ERM were consistent with the expert judgments, and that the KBDSS-ERM had the accuracy ranging from 92.9 to 83.7 percent in assessing the maturity criteria and the overall ERM maturity of CCFs. In addition, the experts recognized the KBDSS-ERM as being a robust, convenient and useful tool for ERM implementation in CCFs.

Research limitations/implications

First, the maturity criteria and ERM best practices that were identified in this study may not be exhaustive even though close attention was paid in the research methodology adopted to circumvent this risk. Additionally, as the applicability of the best practices and the importance of the maturity criteria were checked in the context of CCFs, one should be cautious when the KBDSS-ERM is being applied in other construction firms outside of the CCFs domain.

Practical implications

Using the KBDSS-ERM, the management can clearly understand its ERM implementation as well as the strengths and weaknesses, and obtain the action plans recommended by the KBDSS-ERM. Thus, with the information from the KBDSS-ERM, the management would make better decisions relating to ERM. In addition, while using the KBDSS-ERM, the staffs need to read the ERM best practices, which allows them to learn the ERM fundamentals and produce practical or innovative ideas relating to ERM. Thus, the KBDSS-ERM would contribute to the organizational learning of companies.

Originality/value

The primary contribution is the provision of 191 specific action plans that could be followed to enhance ERM practice. These action plans are arguably the first to be presented for the construction industry and therefore add to existing knowledge of ERM, now embedded in the KBDSS. In addition, the KBDSS-ERM is also the first computerized ERM tool developed specifically for construction firms. Although the KBDSS-ERM is primarily designed for CCFs, the implications of this study are not limited to CCFs because researchers and practitioners could adopt the research method of this study to develop KBDSSs for other construction firms.

Details

Engineering, Construction and Architectural Management, vol. 23 no. 3
Type: Research Article
ISSN: 0969-9988

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Article
Publication date: 6 August 2021

Consilz Tan and Su Zy Lee

The critical success factor of enterprises is the ability to identify risks and subsequently adapt to the ever-changing technology, as well as the business environment…

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256

Abstract

Purpose

The critical success factor of enterprises is the ability to identify risks and subsequently adapt to the ever-changing technology, as well as the business environment. This paper aims to investigate the top risks faced by small and medium-sized enterprises (SMEs). In the meantime, this paper outlines the perspectives on enterprise risk management (ERM)-based best practices and the adoption level of ERM practices in SMEs.

Design/methodology/approach

A mixed methodology was used to collect a comprehensive understanding of the adoption of ERM, especially in SMEs. The research is based on cross-sectional questionnaires and collected from risk practitioners in Malaysia. Detailed analysis of the top risks and best practices presented in this paper to identify the developments of risk management in changing organizations. This study used chi-square tests to examine the distribution of the adoption of the ERM programme using risk and insurance management society risk maturity model attributes. Logit regression was used to test the association of ERM efforts with the probability of adopting/considering ERM practices.

Findings

The findings indicated that business interruption risk and economic slowdown risk are the major concern for companies in Malaysia. A business continuity plan was found to be the most common risk management practice. Efforts such as the establishment of a risk management team and the development of risk appetite and/or risk tolerance statements in an organization are associated with the probability of adopting/considering ERM practices.

Research limitations/implications

This paper helps to identify challenges of implementing risk governance and management in SMEs that shed light on the regulatory setting which we rather know a little about its impacts.

Originality/value

There are limited studies conducted in emerging countries on ERM and the application of the ERM framework in SMEs. Prior research studies are mostly generalized and lack details of risk management strategies applying to specific risks. This paper successfully examined the low maturity level of ERM practices and how SMEs in Malaysia managed those risks that emerged in their organizations.

Details

Journal of Accounting & Organizational Change, vol. 18 no. 1
Type: Research Article
ISSN: 1832-5912

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Article
Publication date: 29 November 2018

Paschoal Federico Neto, Ricardo Fernandes Santos and Fábio Lotti Oliva

The purpose of this paper is to analyze the identification, evaluation and treatment of risks, as well as the appetite and corporate maturity in relation to enterprise risk

Abstract

Purpose

The purpose of this paper is to analyze the identification, evaluation and treatment of risks, as well as the appetite and corporate maturity in relation to enterprise risk management in the urban bus market of the city of São Paulo, Brazil.

Design/methodology/approach

A qualitative case study was formulated in two stages: the first one includes an interview with a bus market specialist and the second stage comprehends eight interviews with executives from bus chassis and coachwork manufacturers and bus fleet operators of this market.

Findings

The results show that larger companies tend to manage their risks in a more structured way when compared with smaller ones, although there are some exceptions. The most critical risks evaluated concerns to the political type followed by the economic/financial, strategic, environmental, social, operational, technological, image and ethical types; and the risk appetites are generally consistent with the risks criticality level.

Practical implications

This case study of an important sector in the economy can be emblematic for the adoption of good practices of risk management by managers.

Originality/value

Risk appetites are generally consistent with criticality and the main forms of treatment are to reduce, share and follow, linked to participation in representative associations.

Details

Benchmarking: An International Journal, vol. 25 no. 9
Type: Research Article
ISSN: 1463-5771

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Article
Publication date: 26 February 2021

Ingrid Saiala Cavalcante de Souza Feitosa, Luiz Cesar Ribeiro Carpinetti and Adiel Teixeira de Almeida-Filho

The purpose of this paper is to propose a supply chain risk management (SCRM) maturity model combined with a fuzzy TOPSIS classification method to evaluate and sort an…

Abstract

Purpose

The purpose of this paper is to propose a supply chain risk management (SCRM) maturity model combined with a fuzzy TOPSIS classification method to evaluate and sort an organization into a pre-defined maturity level.

Design/methodology/approach

An axiomatic and prescriptive research method guided this study. Therefore, it proposes a prescriptive approach of maturity classification based on a theoretical SCRM maturity model combined with a multi-criteria decision technique.

Findings

The results of a pilot application indicated a consistent classification and the value of the model for diagnosing flaws and pointing directions for improving operational and disruption risk management. Its comprehensiveness allows applying it to supply chains of several industry sectors.

Research limitations/implications

The proposed model does not include all possible risks and could be revised in further developments. Also, adjustment of the maturity profiles of the multi-criteria decision-making (MCDM) model requires a learning process from practical applications.

Practical implications

The adoption of the risk management maturity grid by practitioners may bring the benefit of a more objective and comprehensive evaluation of risk management processes in the supply chain context.

Social implications

An immediate social implication derives from the improvement actions that may result from the diagnosis of risk management vulnerabilities identified in the pilot application. In general, the proposed model has the potential to reduce risks, improve results and contribute to economic sustainability.

Originality/value

The maturity grid and decision model integrate overall aspects of risk management, bringing together managerial concepts to deal with a variety of supply chain operational risks. The combined multi-criteria classification procedure to sort the maturity level of an organization is also a novelty.

Details

Benchmarking: An International Journal, vol. 28 no. 9
Type: Research Article
ISSN: 1463-5771

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Book part
Publication date: 9 July 2018

Alain Neher, Alexander Jungmeister, Calvin Wang and Oliver Burmeister

This paper explored the relationship between the embeddedness of a firm’s managerial values and corporate financial performance in Swiss small and medium-sized enterprises

Abstract

This paper explored the relationship between the embeddedness of a firm’s managerial values and corporate financial performance in Swiss small and medium-sized enterprises (SMEs) by developing a conceptual maturity model of managerial values (MM-MV). The MM-MV articulates the extent to which managerial values are embedded within organizations, allowing the analysis of the interrelationship between the degree of values-embeddedness and financial performance in SMEs. The findings suggested that as managerial values become more embedded, financial performance increases; therefore, SMEs exhibiting highly embedded managerial values such as customer-minded, team spirit, innovation-driven reliability, persistency, competency, and engagement tend to financially outperform SMEs that have not fully embedded managerial values throughout the firm.

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Book part
Publication date: 29 December 2016

Francesca Battaglia, Franco Fiordelisi and Ornella Ricci

Does the adoption of the Enterprise Risk Management (ERM) improve bank profitability? Does ERM also reduce bank risk? By analyzing a sample of banks located in European…

Abstract

Does the adoption of the Enterprise Risk Management (ERM) improve bank profitability? Does ERM also reduce bank risk? By analyzing a sample of banks located in European emerging markets between 2005 and 2013, the aim of this chapter is to empirically investigate the determinants of firm performance, both in terms of bank profitability and risk, with respect to the adoption of Enterprise Risk Management (ERM). In order to capture the effect of the ERM program adoption on banks’ performance, we both use market-based measures as well as accounting-based indexes. Following the seminal literature on the topic (Aebi, Sabato, & Schmid, 2012; Eckles et al., 2014; Ellul & Yerramilly, 2013; Hoyt & Liebenberg, 2003, 2011; Lin, Wen, & Yu, 2012; Pagach & Warr, 2010), we adopt a binary proxy variable, that is, the appointment of a Chief Risk Officer (CRO), to define whether the firm is currently undertaking an ERM program. Our results show that a post-ERM firm experiences an increase in the risk-adjusted profits and a reduction of the overall risk.

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Article
Publication date: 3 September 2018

Sana Masmoudi Mardessi and Sonda Daoud Ben Arab

Enterprise risk management (ERM) has become an important subject of increasing interest among companies throughout the world. It is gaining global attention among risk

Abstract

Purpose

Enterprise risk management (ERM) has become an important subject of increasing interest among companies throughout the world. It is gaining global attention among risk management professionals and academics. However, little is known about the extent of ERM implementation in the Tunisian context. More importantly, there are limited studies in literature that examine the determinants of this implementation. The purpose of this study is threefold, to propose an index to measure the level of ERM implementation, to examine the level of ERM implementation in Tunisian companies and to propose a conceptual framework for the determinants of this implementation. From the review of literature, several factors are found to be determinants of ERM implementation. Such factors are the presence of a Chief Risk Officer, the appointment of an internal auditor, the type of industry and the firm size.

Design/methodology/approach

To further understand the relation between ERM implementation and its determinants, a questionnaire survey was conducted in 2016 and administrated to 80 companies. Respondents were CRO and more often internal auditors or financial directors. Other data were collected from annual reports and notes to the financial statements. Along with this, the ordinal regression was applied to test the dependence between ERM implementation and its determinants.

Findings

Based on the data gathered, Tunisian companies have shown an increasing interest in risk management in the post-revolution context; however, an integrated approach of ERM implementation is still at an early stage. Descriptive statistics suggest that ERM is essentially developed in financial institutions, especially in banks and some large companies operating in non- financial industries. With regard to the multivariate regression results, the level of ERM implementation is positively related to the presence of a Chief Risk Officer, internal auditor, the type of industry and the firm size.

Originality/value

This study attempts to contribute to the risk management literature in two ways. Conceptually, this study proposes an ERM index to assess the level of ERM implementation. Empirically, it provides some empirical evidence that highlights factors which determine the level of ERM implementation. Therefore, this study will extend the scope of literature by providing novel empirical evidence by exploring the Tunisian context.

Details

Journal of Financial Reporting and Accounting, vol. 16 no. 3
Type: Research Article
ISSN: 1985-2517

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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: 7 March 2016

Timothy A Krause and Yiuman Tse

– This paper aims to provide an update to the risk management literature, as it compiles a survey of 65 recent theoretical and empirical studies on the topic.

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5503

Abstract

Purpose

This paper aims to provide an update to the risk management literature, as it compiles a survey of 65 recent theoretical and empirical studies on the topic.

Design/methodology/approach

This is a survey paper that summarizes recent theoretical and empirical research regarding the relationship between risk management and firm value.

Findings

Recent empirical evidence provides support for theoretical propositions in the literature that risk management increases firm value and returns, while reducing return and cash flow volatility. The results are largely consistent with early findings, and there have been significant empirical advances that address concerns regarding the endogeneity of risk management practices relative to corporate financial decisions. The literature has become broader and deeper, as there are now studies with larger sample sizes across more industries and geographic areas.

Practical implications

Firms that use sound risk management practices obtain higher valuations, achieve better financial performance and experience diminished costs of financial distress. Recent research has emerged regarding enterprise risk management and its potential for value creation and risk reduction.

Originality/value

The paper provides a new compilation and synthesis of recent theoretical and empirical research in risk management that addresses many of the limitations of prior research.

Details

International Journal of Accounting and Information Management, vol. 24 no. 1
Type: Research Article
ISSN: 1834-7649

Keywords

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