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Enterprise Risk Management: Theory and Practice


  • Brian W. Nocco
  • René M. Stulz


The Chief Risk Officer of Nationwide Insurance teams up with a distinguished academic to discuss the benefits and challenges associated with the design and implementation of an enterprise risk management program. The authors begin by arguing that a carefully designed ERM program-one in which all material corporate risks are viewed and managed within a single framework-can be a source of long-run competitive advantage and value through its effects at both a "macro" or company-wide level and a "micro" or business-unit level. 2006 Morgan Stanley.

Suggested Citation

  • Brian W. Nocco & René M. Stulz, 2006. "Enterprise Risk Management: Theory and Practice," Journal of Applied Corporate Finance, Morgan Stanley, vol. 18(4), pages 8-20.
  • Handle: RePEc:bla:jacrfn:v:18:y:2006:i:4:p:8-20

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    References listed on IDEAS

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    Cited by:

    1. Tom Aabo & Marianna Andryeyeva Hansen & Christos Pantzalis, 2012. "Corporate foreign exchange speculation and integrated risk management," Managerial Finance, Emerald Group Publishing, vol. 38(8), pages 729-751, June.
    2. Eric Dei Ofosu-Hene & Peter Amoh, 2016. "Risk Management and Performance of Listed Banks in Ghana," European Journal of Business Science and Technology, Mendel University in Brno, Faculty of Business and Economics, vol. 2(2), pages 107-121, December.
    3. Matthias Meyer & Cathérine Grisar & Felix Kuhnert, 2011. "The impact of biases on simulation-based risk aggregation: modeling cognitive influences on risk assessment," Metrika: International Journal for Theoretical and Applied Statistics, Springer, vol. 22(1), pages 79-105, September.
    4. Gao, Tianjiao & Gupta, Aparna & Gulpinar, Nalan & Zhu, Yun, 2015. "Optimal hedging strategy for risk management on a network," Journal of Financial Stability, Elsevier, vol. 16(C), pages 31-44.
    5. Aebi, Vincent & Sabato, Gabriele & Schmid, Markus, 2012. "Risk management, corporate governance, and bank performance in the financial crisis," Journal of Banking & Finance, Elsevier, vol. 36(12), pages 3213-3226.
    6. Ai Ping Teoh & Kaih Yeang Lee & Rajendran Muthuveloo, 2017. "The Impact of Enterprise Risk Management, Strategic Agility, and Quality of Internal Audit Function on Firm Performance," International Review of Management and Marketing, Econjournals, vol. 7(1), pages 222-229.
    7. Ishaya John Dabari & Siti Zabedah Saidin, 2015. "Determinants Influencing the Implementation of Enterprise Risk Management in the Nigerian Banking Sector," International Journal of Asian Social Science, Asian Economic and Social Society, vol. 5(12), pages 740-754, December.
    8. Eckles, David L. & Hoyt, Robert E. & Miller, Steve M., 2014. "Reprint of: The impact of enterprise risk management on the marginal cost of reducing risk: Evidence from the insurance industry," Journal of Banking & Finance, Elsevier, vol. 49(C), pages 409-423.
    9. repec:ris:utmsje:0216 is not listed on IDEAS
    10. repec:pje:journl:article27winii is not listed on IDEAS
    11. Zimmer, Anja & Gründl, Helmut & Schade, Christian, 2012. "Be as safe as possible: A behavioral approach to the optimal corporate risk strategy of insurers," ICIR Working Paper Series 06/11, Goethe University Frankfurt, International Center for Insurance Regulation (ICIR).
    12. Kristine Watson Hankins, 2011. "How Do Financial Firms Manage Risk? Unraveling the Interaction of Financial and Operational Hedging," Management Science, INFORMS, vol. 57(12), pages 2197-2212, December.
    13. repec:spr:reaccs:v:22:y:2017:i:3:d:10.1007_s11142-017-9396-0 is not listed on IDEAS
    14. Nadine Gatzert & Michael Martin, 2015. "Determinants and Value of Enterprise Risk Management: Empirical Evidence From the Literature," Risk Management and Insurance Review, American Risk and Insurance Association, vol. 18(1), pages 29-53, March.
    15. Eckles, David L. & Hoyt, Robert E. & Miller, Steve M., 2014. "The impact of enterprise risk management on the marginal cost of reducing risk: Evidence from the insurance industry," Journal of Banking & Finance, Elsevier, vol. 43(C), pages 247-261.
    16. repec:gam:jecomi:v:6:y:2018:i:1:p:4-:d:126949 is not listed on IDEAS
    17. René M. Stulz, 2015. "Risk-Taking and Risk Management by Banks," Journal of Applied Corporate Finance, Morgan Stanley, vol. 27(1), pages 8-18, March.
    18. repec:bla:jrinsu:v:84:y:2017:i:s1:p:345-365 is not listed on IDEAS
    19. repec:zag:zirebs:v:20:y:2017:i:sci:p:25-39 is not listed on IDEAS
    20. Stulz, Rene M., 2016. "Risk management, governance, culture, and risk taking in banks," Economic Policy Review, Federal Reserve Bank of New York, issue Aug, pages 43-60.
    21. Al-Amri, Khalid & Davydov, Yevgeniy, 2016. "Testing the effectiveness of ERM: Evidence from operational losses," Journal of Economics and Business, Elsevier, vol. 87(C), pages 70-82.
    22. René M. Stulz, 2014. "Governance, Risk Management, and Risk-Taking in Banks," NBER Working Papers 20274, National Bureau of Economic Research, Inc.
    23. Claudiu Botoc, 2015. "Risk And Firm Value In European Companies: A Dynamic Panel Data Approach," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(1), pages 792-800, July.

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