engleski

Three-factor model of Enterprise Risk Management implementation: exploratory study of non-financial companies

This study has been motivated by the fact that organizations embracing Enterprise Risk Management (ERM) face different design problems with little guidance on the methods of implementing it successfully. To explore whether the implementation of ERM in companies differs from the prevailing COSO ERM framework, we conducted a survey regarding the implementation of the important ERM characteristics that were derived from a thorough literature review and their connections to COSO (Enterprise risk management integrating with strategy and performance. Executive summary, American Institute of Certified Public Accountants, New York, 2017). The results of exploratory factor analysis indicate the existence of three factors relevant for ERM implementation—strategic, operational, and oversight—suggesting a discrepancy between implementing ERM in practice and the COSO Framework. The descriptive statistics indicates that operational and oversight aspects are implemented in a lesser degree than the strategic aspects. This leads to the conclusion that companies need guidance in operational aspects of the ERM implementation, and that it is necessary to enhance ERM oversight and corporate governance mechanisms. This article can contribute to ERM literature by raising a discussion on practical aspects of implementing ERM and on the possible reasons for companies’ preferences to easier solutions. This study may be useful to companies that are in the process of ERM implementation or enhancement.

Enterprise Risk Management (ERM) ; ERM characteristics ; COSO ; Exploratory factor analysis ; Three-factor model

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