Empirical investigation of risk management practices

Abstract

In risk management research, dealing with known risks and helping companies foresee new risks are areas for subject matter experts. In practice, risk management is often perceived as a set of formal tools and procedures that must be delegated to the professionals. Despite this overall perception of risk, general managers, department managers, and other senior or line managers in organizations deal with questions associated with risk on a daily basis. They are, therefore, sometimes—even without consciously realizing it—involved in risk management practices. This article aims to analyze 'managers' involvement in risk management by empirically exploring how managers identify, assess, and respond to risks. Based on thematic analysis of observational and interview data, management practices used to manage risks were identified, and risk management as a non-linear process that is anchored on the strategic and operational levels and supported by learning from failures was defined. Two different ways of risk management can co-exist in an organization as a result of formal Enterprise Risk Management implementation.

The relationship between enterprise risk management and managerial judgement in decision‐making: A systematic literature review

“…In studies conducted outside Europe, and in contexts where ERM as a concept and practice is still in its infancy, there are concerns about ERM's ability to care for vulnerable constituencies where a long‐term emphasis on environmental and social values, as opposed to short‐term economic goals, is vital. While this suggests that country location may impact MJDM, this is merely speculation and thus warrants future research, as called for by Diab and Metwally (2021), Klein and Reilley (2021) and Nasteckienė (2021). Notably, managerial decision‐making styles in Scandinavian countries favour inclusive and decentralized decision‐making in managing risks (Kallenberg, 2009; Meidell & Kaarbøe, 2017; Wahlström, 2009).…”

“…(2011), De Zwaan et al. (2011), Diab and Metwally (2021), Klein and Reilley (2021), Muralidhar (2010), Nasteckienė (2021).…”

“…Artefacts can facilitate and frame communication between groups to foster innovation, knowledge accumulation and organizational learning (Hall et al., 2015), influencing managerial judgement. Managers also alter artefact design and application to address specific decision problems based on their perceptions of artefact usefulness (Nasteckienė, 2021).…”

“…Since strategically important decisions are frequently made in groups, and these decisions present cognitive challenges, researchers must consider not only the economic perspectives from which technical approaches to risk management have evolved, but also the sociological and psychological perspectives that are important in MJDM (Jeitziner et al., 2017; Vasvári, 2015). Human perceptions of risk and uncertainty are not only constructed technically by risk artefacts, but also socially (Nasteckienė, 2021) and cognitively in the contexts and minds of decision‐makers (Gendron et al., 2021; Vasvári, 2015), as they leverage their expertise (Bailey, 2022) and intuition (Adam & Dempsey, 2020). Therefore, future ERM research should no longer denounce risk as a psychological process (Hardy et al., 2020) and should instead catch up with the cognitive revolution (Butler et al., 2016 ) occurring elsewhere in the accounting, management and strategy literatures.…”

Enterprise risk analysis in an engineering company with a focus on custom manufacturing

“…The need for risk analysis is not limited to production processes or service processes (Szalucki & Fryca-Knop 2017), but it is important also for other corporate activities, such as administration, financial management, marketing, human resources management, etc. From the above, in addition to monitoring risks in production, i.e., productive processes, it is also necessary to monitor risks in supporting processes, without which effective and efficient processes would not be productive (Nasteckiene 2021). This means that analyzed risks should include all areas of the enterprise that need to be addressed comprehensively in an integrated organizational and management corporate system.…”