Risk Factors and Enterprise Risk Management in the Financial Services Industry: A Review of Theory and Evidence
Abstract
The objective of this paper was to critically review both theoretical and empirical literature on risk management. Theoretical literature reveals that, there seems to be no individual theory which can explain risk based on concepts used to manage it. Empirical literature has revealed the emergence of Enterprise Risk Management (ERM) as a concept used in the management of risk from an organization wide perspective with few studies done and in particular from a developing market perspective. Some of the broader themes that have emerged from research have been discussed from a perspective of determinants of implementation of ERM, effects of implementation of ERM and lastly ERM from an organizational structure perspective. Effects of implementation of ERM have further been studied from a firm performance perspective, firm value perspective, default risk perspective and disclosure requirements perspective. From a methodology perspective, regression analysis, correlation analysis and descriptive statistics seem to be the most favored techniques used and in particular in the African continent. As global trends in financial markets are fast changing our perception of financial risks and some risks such as operational, business and systemic risks are now becoming relatively important. Due to inconsistencies in the studies there seems to be further room for research from an emerging markets perspective to outline the risk factors that financial institutions take into consideration in management of risk together with current and future perspectives to further add to the development of Enterprise Risk Management as a modern risk management phenomenon.
Keywords
RiskRisk ManagementRisk FactorsEnterprise Risk Management
References
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