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Enterprise risk management: a capability-based perspective

Author

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  • Yevgen Bogodistov
  • Veit Wohlgemuth

Abstract

Purpose - The purpose of this study is to enhance the existing enterprise risk-management (ERM) theory by introducing both a resource-based view and a dynamic capability perspective. These strategic management concepts might resolve several theoretical shortcomings in the field of risk management. The concept of risk-management capabilities is proposed as an explanation of a firm’s risk resilience. Design/methodology/approach - This paper is conceptual in nature. For illustrative purposes, the paper refers to practical examples. Findings - First, the resource-based view provides a framework that helps to set priorities in risk management. Second, the dynamic capability perspective illustrates how firms can handle unforeseen events. Third, it is proposed that dynamic capabilities are needed to allow a constant reassessment of the impact of specific resources and, consequently, of ERM priorities. Fourth, a risk-management capability, as an integral part of a dynamic capability, allows firms to develop risk resilience in turbulent environments. Research limitations/implications - This paper develops an enhanced framework for ERM within specific boundary conditions. It shows how priorities at the strategic level are to be set, and how these priorities influence the operational level of risk management. Practical implications - The framework provides clear guidelines on setting priorities in ERM and implementing a risk-management process within firms. Originality/value - This study contributes to the theoretical literature on ERM by enhancing it through a new framework. The resource-based view and dynamic capability perspective benefit through insights from risk-management literature.

Suggested Citation

  • Yevgen Bogodistov & Veit Wohlgemuth, 2017. "Enterprise risk management: a capability-based perspective," Journal of Risk Finance, Emerald Group Publishing Limited, vol. 18(3), pages 234-251, May.
    • Handle: RePEc:eme:jrfpps:jrf-10-2016-0131
    DOI: 10.1108/JRF-10-2016-0131
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    Citations

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    Cited by:

    1. Aldo AMERTA & Yanuar NANOK SOENARNO, 2022. "The Impact of Enterprise Risk Management, Corporate Social Responsibility, and Sustainability Report on Firm Value in Banking Sector of Indonesia, Malaysia and Thailand," CECCAR Business Review, Body of Expert and Licensed Accountants of Romania (CECCAR), vol. 3(5), pages 62-72, May.
    2. Fabio Monteduro & Ilenia Cecchetti & Ylenia Lai & Veronica Allegrini, 2021. "Does stakeholder engagement affect corruption risk management?," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 25(3), pages 759-785, September.
    3. Pashkus V.Y. & Pashkus N. A., 2015. "Breakthrough Positioning Strategy: Usage At The Enterprise Level Russian Pharmaceutical Cluster," Annals of marketing-mba, Department of Marketing, Marketing MBA (RSconsult), vol. 2, May.
    4. Abdullah Aloqab & Farouk Alobaidi & Bassam Raweh, 2018. "Operational Risk Management in Financial Institutions: An Overview," Business and Economic Research, Macrothink Institute, vol. 8(2), pages 11-32, June.
    5. Grace Kakiya & Lucy Rono & Jared Mose, 2019. "Effect of Risk Management, Intellectual Capital on Performance of State Corporations in Kenya: Moderating Approach," International Journal of Business and Economic Sciences Applied Research (IJBESAR), International Hellenic University (IHU), Kavala Campus, Greece (formerly Eastern Macedonia and Thrace Institute of Technology - EMaTTech), vol. 12(3), pages 51-61, December.
    6. Ben Kajwang, 2022. "Theoretical review of enterprise risk management culture drivers for insurance firms in Kenya," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 11(5), pages 210-217, July.
    7. Agnieszka Parkitna, 2021. "Safe Business in a Pandemic Risk Environment," European Research Studies Journal, European Research Studies Journal, vol. 0(2B), pages 68-77.
    8. Josphat Nyoni & Manoneka Sithole & Pfumaindisu Rebecca Anesu Mutyambizi, 2022. "Concept paper on the Leadership capabilities to grow female owned enterprises in the clothing sector post COVI-19 pandemic period. Achieving gender equity through business growth," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 6(9), pages 735-741, September.
    9. Conz, Elisa & Magnani, Giovanna, 2020. "A dynamic perspective on the resilience of firms: A systematic literature review and a framework for future research," European Management Journal, Elsevier, vol. 38(3), pages 400-412.
    10. Patrick Dahmen, 2023. "Organizational resilience as a key property of enterprise risk management in response to novel and severe crisis events," Risk Management and Insurance Review, American Risk and Insurance Association, vol. 26(2), pages 203-245, July.
    11. Songling Yang & Muhammad Ishtiaq & Muhammad Anwar, 2018. "Enterprise Risk Management Practices and Firm Performance, the Mediating Role of Competitive Advantage and the Moderating Role of Financial Literacy," JRFM, MDPI, vol. 11(3), pages 1-17, June.
    12. Najat Shakir Mahmood & Elsadig Musa Ahmed, 2023. "Mediating effect of risk management practices in Iraqi private banks financial performance," Journal of Financial Services Marketing, Palgrave Macmillan, vol. 28(2), pages 358-377, June.

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