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Implementation of Enterprise Risk Management: Evidence from the German Property-Liability Insurance Industry

Author

Listed:
  • Muhammed Altuntas

    (Department of Risk Management and Insurance, University of Cologne, Cologne D-50923, Germany.)

  • Thomas R Berry-Stölzle

    (Terry College of Business, University of Georgia, 206 Brooks Hall, Athens, GA 30602, USA. E-mails: trbs@terry.uga.edu, rhoyt@terry.uga.edu)

  • Robert E Hoyt

    (Terry College of Business, University of Georgia, 206 Brooks Hall, Athens, GA 30602, USA. E-mails: trbs@terry.uga.edu, rhoyt@terry.uga.edu)

Abstract

Implementing a properly functioning enterprise risk management (ERM) programme has become increasingly important for insurance companies. Unlike traditional risk management where individual risks are managed in separate silos, ERM is based on the concept of managing all relevant risks in an integrated, holistic fashion. ERM has also been growing in importance as a result of increased attention on risk management in the context of corporate governance. A recent report by The Geneva Association identified strengthening “risk management practices” as one of three key measures that “aim to strengthen financial stability”. Despite the heightened interest in ERM by insurance managers and actuaries, there is only limited empirical evidence on how insurance companies actually implement the ERM approach. The goal of our research is to examine the implementation of the ERM components by insurers. Therefore, we surveyed all German property-liability insurance companies with premiums written in excess of 40 million euros. There are 113 such insurers and 95 of them participated in our survey, leading to a response rate of 84 per cent. The questionnaire covers a comprehensive set of dimensions of an ERM system. In addition to detailed questions about specific ERM activities, the questionnaire assesses when these ERM activities were initiated. The results document significant increases in the extent to which ERM is being implemented by these firms and details the sequence of implementation of this evolving risk management process.

Suggested Citation

  • Muhammed Altuntas & Thomas R Berry-Stölzle & Robert E Hoyt, 2011. "Implementation of Enterprise Risk Management: Evidence from the German Property-Liability Insurance Industry," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 36(3), pages 414-439, July.
  • Handle: RePEc:pal:gpprii:v:36:y:2011:i:3:p:414-439
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    Citations

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    Cited by:

    1. Rasoulian Mohsen & Ghannadi Ali Akhavan & Nojoomi Alireza, 2018. "Risk Taking of Life Insurance Companies from the Perspective of Senior Managers and Experts," Baltic Journal of Real Estate Economics and Construction Management, Sciendo, vol. 6(1), pages 144-151, October.
    2. Theophillus Rufus Akintoye, Aguguom & Oyesola Salawu, Rafiu, 2018. "Earnings Quality And Firms Financial Performance: A Missing Link In The Listed Firms In Nigeria," International Journal of Contemporary Accounting Issues-IJCAI (formerly International Journal of Accounting & Finance IJAF), The Institute of Chartered Accountants of Nigeria (ICAN), vol. 7(2), pages 32-54, December.
    3. Al-Amri, Khalid & Davydov, Yevgeniy, 2016. "Testing the effectiveness of ERM: Evidence from operational losses," Journal of Economics and Business, Elsevier, vol. 87(C), pages 70-82.
    4. Hong, Seock-Jin & Savoie, Michael & Joiner, Steve & Kincaid, Timothy, 2022. "Analysis of airline employees’ perceptions of corporate preparedness for COVID-19 disruptions to airline operations," Transport Policy, Elsevier, vol. 119(C), pages 45-55.
    5. Sorin Gabriel Anton & Anca Elena Afloarei Nucu, 2020. "Enterprise Risk Management: A Literature Review and Agenda for Future Research," JRFM, MDPI, vol. 13(11), pages 1-22, November.
    6. Rami Shaheen & Mehmet Ağa & Husam Rjoub & Ahmad Abualrub, 2020. "Investigation of the Pillars of Sustainability Risk Management as an Extension of Enterprise Risk Management on Palestinian Insurance Firms’ Profitability," Sustainability, MDPI, vol. 12(11), pages 1-20, June.
    7. Felício, J. Augusto & Meidutė, Ieva & Kyvik, Øyvin, 2016. "Global mindset, cultural context, and the internationalization of SMEs," Journal of Business Research, Elsevier, vol. 69(11), pages 4924-4932.
    8. Ishaya John Dabari & Siti Zabedah Saidin, 2015. "Determinants Influencing the Implementation of Enterprise Risk Management in the Nigerian Banking Sector," International Journal of Asian Social Science, Asian Economic and Social Society, vol. 5(12), pages 740-754, December.
    9. Coetzee, Elonya & Govender, Urishanie & Ndeunyema, Pombili & Genc, Bekir & Maré, Yuzanne & Roux, Johann & Nel, Jan & van Eck, Gary, 2023. "An integrated safety framework for the diamond mines: A case study from Namibia," Resources Policy, Elsevier, vol. 82(C).
    10. Mónica Hernández-Madrigal & Cristina Aibar-Guzmán & Beatriz Aibar-Guzmán & Élfego Ramírez-Flores, 2020. "Are external pressures always behind ERM implementation? Evidence from Spanish listed firms," International Journal of Disclosure and Governance, Palgrave Macmillan, vol. 17(2), pages 86-100, September.
    11. Muhammed Altuntas & Thomas R. Berry-Stölzle & J. David Cummins, 2021. "Enterprise risk management and economies of scale and scope: evidence from the German insurance industry," Annals of Operations Research, Springer, vol. 299(1), pages 811-845, April.
    12. Khan, Umair & Khalid, Umair & Farooq, Fatima, 2021. "Endogeneity Quagmire Empirical Evidence from Telecommunication Industry of Pakistan," Journal of Accounting and Finance in Emerging Economies, CSRC Publishing, Center for Sustainability Research and Consultancy Pakistan, vol. 7(4), pages 955-967, December.
    13. Doureige J. Jurdi & Sam M. AlGhnaimat, 2021. "The Effects of ERM Adoption on European Insurance Firms Performance and Risks," JRFM, MDPI, vol. 14(11), pages 1-17, November.

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