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Rethinking the implementation of enterprise risk management (ERM) as a socio-technical challenge

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  • Joachim Jean-Jules
  • Ricardo Vicente

Abstract

ERM is currently the risk management approach intended to render an organization more anticipatory and effective in evaluating, embracing, and managing the myriad risks that it may face. Accordingly, ERM has been embraced by a number of large and medium-sized organizations worldwide. However, many of those companies, while they still believe in the concept of ERM, are frustrated by implementation issues that have impeded the expected benefits of ERM.Therefore, this paper develops a theoretical framework that identifies social factors - factors peculiar to organizational structure and roles, human behavior and quality of working within the organization - and technical factors - factors peculiar to the organizational work system which includes technology, policies, rules procedures and related knowledge among other aspects - that are critical to achieving successful ERM implementation from the perspective of ERM as a complex process innovation. More specifically, this research addresses a significant question: What factors are critical to achieving successful ERM implementation? Given the significant disparity between the adoption and actual implementation and use of ERM, this is an important question. Our conceptualization of ERM implementation draws on three theoretical perspectives: the sociotechnical, the mutual adaptation and the dynamic capability perspective to frame our theoretical foundation. Yet, theories of process-based innovation suggest that an array factors combine together in influencing the extent to which complex business processes such as Enterprise risk management are successfully implemented. Our study casts light on the role of particular socio-technical factors that influence the successful implementation of ERM, extends our understanding of ERM beyond its current narrow financial view, and relates ERM implementation more closely to the challenges of management practice.

Suggested Citation

  • Joachim Jean-Jules & Ricardo Vicente, 2021. "Rethinking the implementation of enterprise risk management (ERM) as a socio-technical challenge," Journal of Risk Research, Taylor & Francis Journals, vol. 24(2), pages 247-266, February.
  • Handle: RePEc:taf:jriskr:v:24:y:2021:i:2:p:247-266
    DOI: 10.1080/13669877.2020.1750462
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    Cited by:

    1. Ali Aghazadeh Ardebili & Elio Padoano & Antonella Longo & Antonio Ficarella, 2022. "The Risky-Opportunity Analysis Method (ROAM) to Support Risk-Based Decisions in a Case-Study of Critical Infrastructure Digitization," Risks, MDPI, vol. 10(3), pages 1-22, February.
    2. Ben Kajwang, 2022. "Theoretical review of enterprise risk management culture drivers for insurance firms in Kenya," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 11(5), pages 210-217, July.
    3. Michele Borgia & Adalberto Rangone & Mario Georgiev Georgiev & Maura La Torre, 2024. "The Relationship between Respondents’ Characteristics and Their Perceptions of Enterprise Risk Management. Results of a Survey," International Business Research, Canadian Center of Science and Education, vol. 17(3), pages 1-1, June.
    4. Mojca Marc & Marika Arena & Darja Peljhan, 2023. "The role of interactive style of use in improving risk management effectiveness," Risk Management, Palgrave Macmillan, vol. 25(2), pages 1-21, June.
    5. Alessandra Allini & Raffaela Casciello & Marco Maffei & Martina Prisco, 2022. "The national culture as a determinant of ERM quality: Empirical evidence in the European banking context," MANAGEMENT CONTROL, FrancoAngeli Editore, vol. 2022(1), pages 79-102.

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