Risk Management Practices Adopted by European Financial Firms with a Mediterranean Connection

Following the economic and financial crises, any activity involving internal controls, especially risk management, has been given more attention. With this study, we aim to contribute further to the existing literature on risk management by looking at practices adopted by financial services firms licenced in Europe with a Mediterranean connection. We used parts of a questionnaire adopted by two of the authors in another study on risk management practices adopted by Maltese financial services firms and sent it to prospective candidates who work closely within risk management, to collect our data. This resulted in 1635 participants. This data was used to (1) bring to light the mechanisms and strategies used in risk management by these organisations to maximise their opportunities, manage their risks, and maintain stability in their financials. Also, (2) we check if this is perceived as contributing to 'principled performance'. Finally, (3) we examine the extent to which risk management capabilities offer a competitive advantage to these firms. Our findings evidence that the objective by EMP and the EU, that is to ensure that members operate 'on the same level playing field' within risk management, in financial services of firms with a Euro-Mediterranean connection, has been achieved.