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Enterprise Risk Management: Improving Embedded Risk Management and Risk Governance

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  • Werner Gleißner

    (Faculty of Business and Economics, TUD Dresden University of Technology, 01062 Dresden, Germany
    FutureValue Group AG, Obere Gärten 18, 70771 Leinfelden-Echterdingen, Germany)

  • Thomas B. Berger

    (Department of Business and Engineering, Faculty of Engineering, Baden-Wuerttemberg Cooperative State University (DHBW Stutgart), Lerchenstr. 1, 70174 Stuttgart, Germany)

Abstract

We argue for an integrated, decision-oriented enterprise risk management (ERM) system focused on value drivers rather than risk minimization and using quantitative risk aggregation based on the best available information. Our holistic view on ERM includes cultural, organizational, and technical aspects, presenting seven areas for more effective risk governance and resilience grounded in a robust enterprise framework. Our analysis, supported by a structured literature review, covers these seven key areas for ERM development. Our review shows that risk aggregation, quantification, and decision-making support are only covered by a few publications. The paper offers insights on linking risk management with strategic decision-making using risk aggregation techniques (Monte Carlo simulation).

Suggested Citation

  • Werner Gleißner & Thomas B. Berger, 2024. "Enterprise Risk Management: Improving Embedded Risk Management and Risk Governance," Risks, MDPI, vol. 12(12), pages 1-15, December.
    • Handle: RePEc:gam:jrisks:v:12:y:2024:i:12:p:196-:d:1537096
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    References listed on IDEAS

    as
    1. Sanmugam Annamalah & Murali Raman & Govindan Marthandan & Aravindan Kalisri Logeswaran, 2018. "Implementation of Enterprise Risk Management (ERM) Framework in Enhancing Business Performances in Oil and Gas Sector," Economies, MDPI, vol. 6(1), pages 1-12, January.
    2. André P. Liebenberg & Robert E. Hoyt, 2003. "The Determinants of Enterprise Risk Management: Evidence From the Appointment of Chief Risk Officers," Risk Management and Insurance Review, American Risk and Insurance Association, vol. 6(1), pages 37-52, February.
    3. Parvaneh Saeidi & Sayyedeh Parisa Saeidi & Leonardo Gutierrez & Dalia Streimikiene & Melfi Alrasheedi & Sayedeh Parastoo Saeidi & Abbas Mardani, 2021. "The influence of enterprise risk management on firm performance with the moderating effect of intellectual capital dimensions," Economic Research-Ekonomska Istraživanja, Taylor & Francis Journals, vol. 34(1), pages 122-151, January.
    4. Lester G. Telser, 1955. "Safety First and Hedging," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 23(1), pages 1-16.
    5. Gordon, Lawrence A. & Loeb, Martin P. & Tseng, Chih-Yang, 2009. "Enterprise risk management and firm performance: A contingency perspective," Journal of Accounting and Public Policy, Elsevier, vol. 28(4), pages 301-327, July.
    6. Matteo Rossi, 2016. "The capital asset pricing model: a critical literature review," Global Business and Economics Review, Inderscience Enterprises Ltd, vol. 18(5), pages 604-617.
    7. Mike Dempsey, 2013. "The Capital Asset Pricing Model ( CAPM ): The History of a Failed Revolutionary Idea in Finance?," Abacus, Accounting Foundation, University of Sydney, vol. 49, pages 7-23, January.
    8. Philipp Lechner & Nadine Gatzert, 2018. "Determinants and value of enterprise risk management: empirical evidence from Germany," The European Journal of Finance, Taylor & Francis Journals, vol. 24(10), pages 867-887, July.
    Full references (including those not matched with items on IDEAS)

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