Business strategy, enterprise risk management and organizational performance

Purpose: This paper aims to identify the influence of business strategy on enterprise risk management (ERM) adoption and organizational performance (OP). In addition, the mediation effect of ERM on the relationship between business strategy and OP is assessed. Design/methodology/approach: A cross-sectional analysis of primary data gathered from 174 public listed companies in Malaysian Bourse through survey was conducted. Findings: Companies with cost leadership business strategy are more eager to implement ERM compared to companies with differentiation strategy. The results also indicate that ERM implementation has a significant positive impact on OP. Though ERM is a partial mediator of the relationship between cost leadership strategy and OP, it does not mediate the relationship between differentiation strategy and OP. Research limitations/implications: One of the limitations of this study was the small number of respondents, comprising only 174 public listed companies. In addition, the manifest variables adopted from previous studies may not be the best indicators to measure latent variables. Nonetheless, this study fills the gaps in ERM studies by determining the impact of different kinds of strategy on ERM adoption and investigating the mediating effect of ERM on the relationship between business strategy and OP. Practical implications: Although the trend in Malaysia seems to move toward ERM adoption, evidence shows that it is not widely practiced among Malaysian firms. Directors of Malaysian companies can understand better the impact of enterprise business strategy on the adoption of risk management and how ERM influences OP. The results of this study also provide valuable insights for the corporate governance regulatory authorities. Originality/value: This paper is among the few to assess the impact of firm’s strategy on ERM adoption and to determine the mediation effect of ERM on the relationship between business strategy and OP

Critical success factors for dynamic enterprise risk management in responsive organisations : a factor analysis approach

Globalisation and technology advancements have disrupted the organisational landscape and with the proliferation of new technology; risk management is fundamental to transforming the business especially considering the dynamic nature of the digital society organisations now exist in. However, the challenge faced by the enterprise risk management (ERM) function operating in such a dynamic and transformative environment, is the capability to continuously innovate, evolve and transform its risk management processes to meet the needs of the organisation. Questionnaire survey research examined the relative importance of 18 critical success factors for dynamic ERM. Factor analysis revealed that the appropriate grouping of the 18 critical success factors (CSFs) are ERM charter, ERM processes, and ERM business alignment. These findings should empower organisations to identify risk management processes influencing agility in the risk management practise applied.http://link.springer.combookseries/558hj2020Informatic