Enterprise Risk Management Practice

Over the last decade, largely because of the profound events of 2007-2009, there has been an increasing consciousness in risk literature that a more holistic approach to managing risks would enrich the effectiveness of risk management practices across industries. Despite the heightened interest in enterprise risk management (ERM) by academics and practitioners, there is an absence of empirical evidence on the impact of various ERM practices on the three most commonly used financial performance ratios: return on total assets, net profit margin and return on equity. The absence of clear empirical evidence on the value of ERM and the effects of the level of ERM practices on financial performance continues to limit the growth of these programs. This book, therefore, provides a new metric of success for enterprise risk management, in assessing and managing uncertainties that various enterprises face as value is being generated. The analysis should help shed some light on whether the use of a fully functioning ERM helps big companies enhance their financial performance, and should be especially useful to the top executives in making decisions towards adopting ERM within their firms.