企业风险管理与公司绩效外文文献翻译中英文2020

企业风险管理与公司绩效外文翻译中英文2020

英文

Enterprise risk management and firm performance: Role of the risk

committee

Muhammad Malik, Mahbub Zaman, Sherrena Buckby Abstract

In recent years, there have been increasing efforts in the corporate world to invest in risk management and governance processes. In this paper, we examine the impact of Enterprise Risk Management (ERM) on firm performance by examining whether firm performance is strengthened or weakened by the establishment of a board-level risk committee (BLRC), an important governance mechanism that oversees ERM processes. Based on 260 observations from FTSE350 listed firms in the UK during 2012–2015, we find the effectiveness of ERM significantly and positively affects firm performance. We also find strong BLRC governance complements this relationship and increases the firm performance effects of ERM. Our findings suggest the mere formation of a BLRC is not a panacea for ERM oversight; however, existence of a structurally strong BLRC is crucial for effective ERM governance.

Keywords: Enterprise risk management, Risk committee, Risk governance, Firm performance

Introduction

Recent events, including the corporate downfalls of the early 2000s and the Global Financial Crisis (GFC) of 2007–09, have led to increased international regulatory efforts to enhance risk management (RM) practices. In the UK, the Walker Report (2009) and guidelines from the Financial Reporting Council (FRC, 2011, FRC, 2014a, FRC, 2014b) suggest listed firms should adhere to sophisticated RM practices, including the creation of a holistic RM framework and greater involvement from boards of directors in risk governance. An increasing number of UK listed firms now adhere to these recommendations, which focus on the establishment of an Enterprise Risk Management (ERM) process and the establishment of a board-level risk committee (BLRC) to enhance the board’s risk oversight function. This paper contributes to the literature on ERM by examining the impact of ERM on UK firm performance, particularly whether this relationship is strengthened or weakened by the adoption of a BLRC. To date, research investigating the roles and outcomes of a BLRC is scarce. This study focuses on evidence from UK listed firms to provide key insights into this emerging issue.

Our study, motivated by key corporate governance guidelines, considers the impact of ERM process adoption (including the structural strength of BLRC) on firm performance in UK FTSE350 firms. We apply Tobin’s Q as our firm performance measure based on prior resea rch