The Value of Investing in Enterprise Risk Management

Journal of Risk and Insurance - Tập 82 Số 2 - Trang 289-316 - 2015
Martin F. Grace1, J. Tyler Leverty2, Richard D. Phillips3, Prakash Shimpi4
1 Temple University - Risk Management & Insurance & Actuarial Science
2University of Wisconsin, Madison
3Georgia State University - Risk Management & Insurance Department
4Fraime LLC

Tóm tắt

ABSTRACTPrior studies show that enterprise risk management improves firm performance. This article investigates which aspects of enterprise risk management add value. We find that the use of economic capital models and dedicated risk managers improve operating performance. Requiring the dedicated risk manager report to the board of directors or to the chief executive officer (CEO) also increases value. The following combination of enterprise risk management initiatives yields the greatest increase in firm value: a simple economic capital model, a dedicated risk manager that is a cross‐functional committee, and requiring the risk manager report to the board or CEO.

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