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Implementation of Enterprise Risk Management (ERM) Framework in Enhancing Business Performances in Oil and Gas Sector

Author

Listed:
  • Sanmugam Annamalah

    (Faculty of Business, SEGi University College, Kuala Lumpur, Wilayah Persekutuan 50100, Malaysia)

  • Murali Raman

    (Faculty of Management, Multimedia University, Cyberjaya 63100, Malaysia)

  • Govindan Marthandan

    (Faculty of Management, Multimedia University, Cyberjaya 63100, Malaysia)

  • Aravindan Kalisri Logeswaran

    (Faculty of Management, Multimedia University, Cyberjaya 63100, Malaysia)

Abstract

This study empirically investigated the ERM Implementation model and proposed framework to identify and manage risks in Oil and Gas Sector in Malaysia. The study examined the role of ERM framework implementation in improving business performance by utilizing Economic Value Added as a measurement tool. The study also provides insights to the Oil and Gas Sector to gain higher profit returns, reduce cost of capital, and improve shareholders value. Moreover, it contributes significantly in the field of Enterprise risk management in Malaysia. The identification and management of risk is significant to organizations in managing risks efficiently. Expectations of stakeholders of the organization are high from executives and board of directors in managing the risk effectively. Linear regression analysis is utilized in analyzing the data obtained from the data collection performed for this paper. Purposive sampling has been employed in order to select the firms that are operating in Malaysian oil and gas sector. Primary data has been utilized to collect data with the help of structured questions and interview techniques that involve semi structured questions. The results of the regression analysis conducted for in this study suggested that a significant and positive relationship between Enterprise Risk Management with operational risk; market risk; political risk; health, safety and environmental risk; and, also business performance.

Suggested Citation

  • Sanmugam Annamalah & Murali Raman & Govindan Marthandan & Aravindan Kalisri Logeswaran, 2018. "Implementation of Enterprise Risk Management (ERM) Framework in Enhancing Business Performances in Oil and Gas Sector," Economies, MDPI, vol. 6(1), pages 1-12, January.
    • Handle: RePEc:gam:jecomi:v:6:y:2018:i:1:p:4-:d:126949
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    References listed on IDEAS

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    1. 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, September.
    2. Lai Fong Woon & Noor Azlinna Azizan & M. Fazilah Abdul Samad, 2011. "A Strategic Framework For Value Enhancing Enterprise Risk Management," Journal of Global Business and Economics, Global Research Agency, vol. 2(1), pages 23-47, January.
    3. P.K. Gupta, 2011. "Risk management in Indian companies: EWRM concerns and issues," Journal of Risk Finance, Emerald Group Publishing, vol. 12(2), pages 121-139, March.
    4. Radiah Othman & Rashid Ameer, 2009. "Market risk disclosure: evidence from Malaysian listed firms," Journal of Financial Regulation and Compliance, Emerald Group Publishing Limited, vol. 17(1), pages 57-69, February.
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    Cited by:

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    3. Sorin Gabriel Anton & Anca Elena Afloarei Nucu, 2020. "Enterprise Risk Management: A Literature Review and Agenda for Future Research," JRFM, MDPI, vol. 13(11), pages 1-22, November.
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    5. Ahsan Waqar & Idris Othman & Roberto Alonso González-Lezcano, 2023. "Challenges to the Implementation of BIM for the Risk Management of Oil and Gas Construction Projects: Structural Equation Modeling Approach," Sustainability, MDPI, vol. 15(10), pages 1-28, May.
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    8. 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.
    9. Mihaela Brindușa TUDOSE & Valentina Diana RUSU & Silvia AVASILCĂI, 2020. "Measuring Financial Performance: Financial Ratios Vs. Economic Value Added," EURINT, Centre for European Studies, Alexandru Ioan Cuza University, vol. 7, pages 172-188.

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