ENTERPRISE RISK MANAGEMENT AT QATAR'S CONSTRUCTION INDUSTRY

Lately, enterprise risk management (ERM) is an emerging topic, which has attracted the worldwide attention. All organizations around the world recognize the importance of risk management regardless of their size or industry as it has been a response to the volatile environment. The Government of Qatar has recognized the importance of risk management and some of the ministries have applied risk management principles in their organizations. Because of the multitude in their operations, construction firms are prime candidates for ERM adoption. Although there is an increased number of studies on risk management around the world, limited studies have strived to provide an understanding of the implementation of Enterprise Risk Management (ERM) in the construction industry. This research investigates and provides an understanding of ERM implementation in the Qatari construction industry. This research tries to investigate the existing level of ERM in the Qatari construction industry. In addition, the research investigates the criteria that affect the ERM implementation and the factors that drive or hinder the ERM implementation in Qatar. By using a survey as the main data collection method, almost 80 construction companies have responded. The results reported a medium-level overall the ERM maturity in these companies. In addition, a total of 16 important maturity criteria and 64 applicable ERM best practices were identified and included in the survey questionnaire. The research found that 14 drivers and 32 hindrances had significantly positive and negative influence on ERM implementation in the construction companies in Qatar. The research has reviewed the literature and adapted the proposed ERM framework by Zhao proposes in his book on ERM in International construction operations. Since few studies have discussed the ERM implementation in construction firms in the Gulf region, this study is a pioneering contribution to the current literature of the ERM in Qatar’s construction Industry

Enterprise Risk Management: Review, Critique, and Research Directions

© 2014 Elsevier Ltd. Many regulators, rating agencies, executives and academics have advocated a new approach to risk management: Enterprise Risk Management (ERM). ERM proposes the integrated management of all the risks an organization faces, which inherently requires alignment of risk management with corporate governance and strategy. Academic research on ERM is still in its infancy, with articles largely in accounting and finance journals but rarely in management journals. We argue that ERM offers an important new research domain for management scholars. A critical review of ERM research allows us to identify limitations and gaps that management scholars are best equipped to address. This paper not only identifies how management scholars can contribute to ERM research, but also points out why ERM research (and practice) needs management research for its development

Enterprise Risk Management, Corporate Governance And Systemic Risk: Some Research Perspectives

The general goal of Enterprise Risk Management (ERM) processes is to generate economic value through the coverage of firm business risk, on the one hand, and by exploiting the positive side of uncertainty conditions, on the other hand. The increasing attention attributed to ERM in the creation of economic value has led to even greater interactions between risk management mechanisms and the corporate governance system. In other words, in the last two decades, the relationships between corporate governance and ERM increased since the ERM processes have been considered more and more as critical drivers to combine strategic objectives with relative low volatility of company performance. The basic idea is that a good corporate governance system must deal about specific risks along with their interactions and, at the same time, the firm’s business risk as a whole. Moreover, an efficient and effective ERM system provides clear information about linkages between strategic opportunities and risk exposure and offers tools able to manage in an optimal way the negative side of business risk (or downside risk) as wellas its positive side (or upside risk). Accordingly, extant studies concerning the relationships between ERM and corporate governance have been focusing on a micro-level of analyses (i.e., the individual organization) and, specifically, on a firm’s benefits that stem from the adoption of proper ERM processes that are consistent with corporate governance goals and are able to sustain the increase of economic value while maintaining a bearable business risk over time. From our initial analyses, a gap in literature arises. We argue that the interdependence between ERM and corporate governance may be analyzed from a broader point of view as well (i.e., the firm and its task environment composed by its suppliers, customers, and partners). In particular, our research idea is to enlarge traditional studies about interrelations between corporate governance and ERM taking into account whether such interrelations could be a driver of risk transfer from the focal organization to other organizations that belong to its task environment. Moreover, this study aims to deepen the mechanisms by which the transfer of risk from a focal organization to its task environment may foster the emergence of systemic risk, i.e., a macro risk coming from domino and/or network effects. Therefore, our paper aims to find new research areas by combining micro and macro issues tied to corporate governance, ERM and systemic risk. The starting point of our work is the three following assumptions: 1) The compliance of a firm to ERM processes as well as to corporate governance rules implies the reduction as much as possible of firm business risk; 2) The reduction of the firm business risk leads to externalizing the firm business risk through risk-sharing mechanisms; 3) The risk-sharing may arise like a driver of systemic risk especially in those industries featured by strong network interrelations. Starting from the above assumptions, the paper goal is to open a new research area which combines four academic fields (ERM, corporate governance, corporate finance, and macro-finance). So far, our initial findings tell us that the following research questions arise: RQ1: What are the conditions under which the transfer of business risk towards organizations that belong to a firm task environment is likely to become a source of systemic risk in a specific industry? RQ2: How does the capital structure of a focal firm affect its propensity to transfer business risk not only to commercial but also to financial stakeholders included in firm task environment? RQ3: How does the transfer of business risk influence the capital cost of the focal firm as well as of the organizations that absorbed such risk

The Essence of Enterprise Risk Management in Today’s Business Enterprises in Developed and Developing Nations

Risk as expected is not that fearsome matter, although it may keep management awake at night; revenue would not be possible without it. Enterprise Risk Management at basics is broadly portrayed as structure of handling and managing risk across an organization. The key concern of this research is to investigate the ERM. The findings highlight that there are very few enterprises from developing nations which are into ERM while the developed nations’ enterprises are huskily and vigorously involved in it and this gap is due to the lack of awareness and serious concerns for value maximization of enterprise share holders in developing nations.Risk, Enterprise Risk Management, Financial Institutions, Developed Nations, Developing Nations

Operational Excellence in Manufacturing, Service and the Oil & Gas: the Sectorial Definitional Constructs and Risk Management Implication

The current global business climate has not been favorable to most firms irrespective of industry affiliation. That condition necessitated companies to adopt operational excellence as a strategy for optimising output with little resources, reducing lead time with the efficient use of assets and employees and avoiding safety and health issues to people and the environment. As a result of the need for operational excellence, many kinds of literature defined the concept based on the context of industry or sector. Industries such as manufacturing, services, oil and gas, mining and so many industries to mention a few, have their unique construct in the definition and therefore causing dilemma on which dimension to hold on to. It is against this backdrop that this paper synthesizes and integrate all the varying dimensions and fuses out similarities, differences and the antecedence of research directions taken on the few mentioned sectors. The paper thus concludes that the unique construct among all the definitions is continuous improvement, cost reduction, quality, time utilization, operational efficiency, staff involvement and output optimisation. However, they varied on risk management, staff health, safety and the concern for the environment, which is unique to oil and gas industry and that can affect the choice of research variables

Research Insights About Risk Governance: Implications From a Review of ERM Research

In recent years, expectations for increased risk governance have been placed explicitly on boards of directors. In response, boards are being held responsible for not only understanding and approving management’s risk management processes, but they are also being held responsible for assessing the risks identified by those processes as part of overseeing management’s pursuit of value. These increasing responsibilities have led a number of organizations to adopt enterprise risk management (ERM) as a holistic approach to risk management that extends beyond traditional silo-based risk management techniques. As boards, often through their audit committee, consider management’s implementation of ERM as part of the board’s risk oversight, a number of questions emerge that can be informed by academic research related to ERM. This article summarizes findings from ERM research to provide insights related to the board’s risk governance responsibilities. We also identify a number of research questions that warrant further analysis by governance scholars. It is our hope that this article will spawn varying types of research about ERM and corporate governance

Determinants of Enterprise Risk Management (ERM) and The Impact of ERM on Firm Performance: An Empirical Analysis of Indonesias Public Listed Banking Firms

Objectives: This paper examines the influential factors of potential adoption of ERM and the impact of ERM adoption on the public listed banking firms� performances in Indonesia during 2009-2017. Methodology: We use logistic regression to test four potential factors as the driving forces behind the potential adoption of ERM and linear regression to test the impact of ERM on firms� performances. Findings: Our result suggests that firms with greater size, having more institutional ownership, and being part of Multinational Company are more likely to adopt ERM, while the implementation of ERM has no significant impact on the firms� performance. Novelty: Little empirical research has been conducted on the topic, especially in developing economies like Indonesia. This study will broaden the scope of literature by providing novel empirical evidence

The effect of enterprise risk management on firm value: evidence from Malaysian technology firms

This paper aims to examine the relationship between ERM and firm value in Malaysia. In the past literature, ERM had been argued to increase firm value but empirical evidence shows mixed and inconclusive results. Using sample from 2004 to 2012, this paper furthers the analysis on the relationship between ERM and firm performance among technology firms in Malaysia. Indeed, technology industry is the fastest growing and a volatile industry, which requires continuous innovation. These make technology firms more prone to risk exposure. In analyzing this issue, dynamic panel data is employed to allow cross-sectional and time series analysis. Our results show that the implementation of ERM in the previous year has strong negative relationship with firm value at 1 percent significance level. It supports the argument that the effect of ERM is not immediately realized as well as entails high implementation cost. The findings provide useful input and insight in formulating new policy in relation to corporate governance, particularly ERM in Malaysia

Empirical Analysis of Joint Impact of Enterprise Risk Management and Corporate Governance on Firm Value

This paper analyzes simultaneity and endogeneity of ERM and Corporate Governance. It assesses quantitative relationship between Corporate Governance, ERM and value of the firm. The research results provide quantitative justifications for the boards to make investments in ERM and Corporate Governance initiatives for improved shareholder wealth.  3SLS-IV system modelling was applied on 2004-11 data of Gulf Cooperation Council financial institutions. Our research confirms the simultaneity and endogeneity of Corporate Governance, ERM and Firm Value determinants. Firm value is jointly and positively impacted by ERM & Corporate Governance initiatives although the impact was less significant. Unexpectedly, ERM initiative was significantly and negatively impacted by determinants such as intangibility, and profitability. Firm size was the only determinant that showed significant and positive impact on firm value. Relative to UAE the corporate governance mechanism was active in Bahrain, Saudi Arabia, Kuwait and Oman firms. Further, the existence of audit committees in the GCC firm’s boards and ERM adoption significantly positively impacted the corporate governance by 3.42% and 1.7239% respectively. Keywords: Corporate Governance, Enterprise Risk Management, Firm Value, Simultaneity, Endogeneity, Gulf Cooperation Council (GCC) economies. JEL codes: C15, C21, C51, D57, F30, G21, G32, G34, K22, L21, M31, M41, N25, O1

Enterprise risk management in the airline industry - risk management structures and practices

This thesis was submitted for the degree of Doctor of Philosophy and awarded by Brunel University London.This thesis expands on the literature in the under-researched field of airline risk management by exploring organisational structures and practices of airline risk management systems and their technical and institutional drivers. In particular, it focuses on the phenomenon of Enterprise Risk Management (ERM) and its alignment to the requirements of airline business contexts. The theoretical framework informing this study combines structural contingency theory with two strands of institutional theory, namely old institutional economics and new institutional sociology. In this thesis, the phenomenon of risk management is investigated in situ as an organisational practice through a two-stage empirical study. Firstly, an exploratory field study was undertaken in a panel of ten international airlines. Secondly, the field study was complemented with findings from two explanatory case studies. This study explains how in developing risk management systems airlines balance the sometimes conflicting technical and institutional demands of their respective task and institutional environments. The adoption and implementation of ERM in airlines are found to be driven primarily by coercive and normative pressures, and expectations of improved organisational effectiveness and efficiency. This study additionally improves general understanding of the nature of ERM and its coupling and fluidity in the organisational settings of airlines. It lends evidence for systematic variations in roles, uses, and organisational design choices of ERM systems. It shows the interdependent nature of airlines’ ERM systems and other management systems. The study also demonstrates that the adoption of ERM in airlines drives development of new institutions, rules, and routines for comprehensive management of risks. Consistent with the tenets of contingency theory, this study conveys lack of a universally appropriate design of an airline ERM system. The main contribution of this thesis is to assess airline risk management systems, identify core drivers of effective risk management practice, and provide a framework with the aim of guiding airlines in the development of enterprise-wide risk management approaches aligned with the requirements of their institutional and technical contexts. Furthermore, this research overcomes the limitations of previous, mostly quantitative studies of ERM coupling and dynamics in organisations, as it explores and explains the structures, practices, and rationales of airline risk management systems within wider organisational contexts through the use of qualitative methodologies