A Comparison of the Main ERM Frameworks: How Limitations and Weaknesses can be Overcome Implementing IT Governance

Abstract

The significance of the Enterprise Risk Management (ERM) is widely recognized by the academic and professional literature. Knowledge and management of business risks are an integral part of every successful business strategy and are increasingly becoming a primary factor of competitiveness. Although several risk management frameworks have been published and updated over time, these standards still have limitations. The advent of IT helped companies to better manage business risks. The rise of the IT governance has improved the management and the monitoring of business processes as well as the implementation of policies and procedures. The aim of this paper is twofold. First, a comparative analysis of the main risk management frameworks was carried out, highlighting their limits and weaknesses. Second, it was highlighted how the IT governance and the related frameworks as COBIT could contribute to a better implementation of the risk management process that allows to overcome the limitations of the examined standards.The significance of the Enterprise Risk Management (ERM) is widely recognized by the academic and professional literature. Knowledge and management of business risks are an integral part of every successful business strategy and are increasingly becoming a primary factor of competitiveness. Although several risk management frameworks have been published and updated over time, these standards still have limitations. The advent of IT helped companies to better manage business risks. The rise of the IT governance has improved the management and the monitoring of business processes as well as the implementation of policies and procedures. The aim of this paper is twofold. First, a comparative analysis of the main risk management frameworks was carried out, highlighting their limits and weaknesses. Second, it was highlighted how the IT governance and the related frameworks as COBIT could contribute to a better implementation of the risk management process that allows to overcome the limitations of the examined standards.

How Can Enterprise Risk Management Help in Evaluating the Operational Risks for a Telecommunications Company?

“…A key step of the risk management process is risk evaluation (COSO 2017). Rubino (2018) explains that risk and uncertainty bring negative outcomes, as well as positive opportunities; in order to implement this philosophy within the company, events need to be identified and evaluated, stating that the published ERM frameworks have some limitations, such as the lack of risk evaluation techniques to be implemented in specific sectors. Accordingly, one of the most important challenges for the management of the company is to improve its results through its operational risk identification, evaluation, and management, being the operational risks the basic and most common events for any business unit in an organization (Callahan and Soileau 2017).…”

The Practice of Enterprise Risk Management and Sustainable Performance in Jordan

“…Risk is assessed by engineers and designers from a variety of perspectives, including technological, financial, environmental and health (Walke et al, 2011). Moreover, risk and uncertainty can affect an organization in both positive and negative ways, according to Rubino (2018). As a result, businesses that do not accept risk as an essential part of their operations will not be able to prosper and create value for their stakeholders.…”

“…Thus, risk management is also known as the identification of the risks, likelihood of occurrence, and impact on the business (Adhariani, 2022). Corporate crises in recent years have highlighted how poorly organizations manage risks (Rubino, 2018). Organizations have changed their risk management strategies in response to these difficulties from discrete and individualized techniques to a more thorough and integrated enterprise risk management (ERM) perspective (Nasr et al, 2019).…”

Does Working Capital Management Influence Operating and Market Risk of Firms?

“…The potential losses produced by events caused by inadequate or failing processes, people, equipment, and systems, as well as external occurrences, are referred to as operational risks (Ruiz-Canela López 2021). Rubino (2018) argued that risk and uncertainty have negative outcomes as well as positive opportunities; in order to implement this philosophy within the company, events must be identified and evaluated (Ruiz-Canela López 2021) One of the basic problems for management is to enhance performance through operational risk identification, evaluation, and management, with operational risks being the most common element for any business unit in an organization. Razi et al (2021) proposed that different aspects of policies could reduce the risk in the day to day-to-day operations of the firms.…”