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Risk Factors in Financial Services Industry: Application, Threats, Theoretical and Empirical literature in Management of Risk

Author

Listed:
  • Khaldoun M. Al-Qaisi

    (Faculty of Business, Vice Dean of Academic Research and Graduate Studies, Amman Arab University, Amman, Jordan,)

  • Rafat M. Al-Batayneh

    (Faculty of Business, Finance Department, Amman Arab University, Jordan)

Abstract

The purpose of this paper is to provide a critical study over enterprise risk management. For this, the paper has reviewed theoretical and empirical literature in management of risk. Theoretical literature depicts that no theory can explain about the risk management techniques alone. While empirical literature providesthe importance of enterprise risk management to be used in the organization for managing the risk, exist in portfolio structure of the organization. The paper besides that also provides theoretical and empirical literature and depicts about the effect on working of the organization by implementing the enterprise risk management. The paper has discussed many theories on the implications on organization. The paper briefly discusses about how the performance of organization structure, firm value, default risk perspective, and disclosure requirement would be affected due to implication of enterprise risk management model. The paper has discussed the importance of techniques like correlation, descriptive analysis and regression analysis. At last, the paper provides some recommendations, due to inconsistency in provided theories. For this, the paper considers present and future market conditions to lead to more development in enterprise risk management.

Suggested Citation

  • Khaldoun M. Al-Qaisi & Rafat M. Al-Batayneh, 2018. "Risk Factors in Financial Services Industry: Application, Threats, Theoretical and Empirical literature in Management of Risk," International Journal of Economics and Financial Issues, Econjournals, vol. 8(2), pages 210-218.
  • Handle: RePEc:eco:journ1:2018-02-25
    as

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    References listed on IDEAS

    as
    1. Ryan Baxter & Jean C. Bedard & Rani Hoitash & Ari Yezegel, 2013. "Enterprise Risk Management Program Quality: Determinants, Value Relevance, and the Financial Crisis," Contemporary Accounting Research, John Wiley & Sons, vol. 30(4), pages 1264-1295, December.
    2. Donald Pagach & Richard Warr, 2011. "The Characteristics of Firms That Hire Chief Risk Officers," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 78(1), pages 185-211, March.
    3. John Lintner, 1965. "Security Prices, Risk, And Maximal Gains From Diversification," Journal of Finance, American Finance Association, vol. 20(4), pages 587-615, December.
    4. Leen Paape & Roland F. Spekl�, 2012. "The Adoption and Design of Enterprise Risk Management Practices: An Empirical Study," European Accounting Review, Taylor & Francis Journals, vol. 21(3), pages 533-564, January.
    5. Nkoko Blessy Sekome & Tesfaye Taddesse Lemma, 2014. "Determinants of voluntary formation of risk management committees: Evidence from an emerging economy," Managerial Auditing Journal, Emerald Group Publishing, vol. 29(7), pages 649-671, July.
    6. 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.
    7. Merton, Robert C., 1977. "On the pricing of contingent claims and the Modigliani-Miller theorem," Journal of Financial Economics, Elsevier, vol. 5(2), pages 241-249, November.
    8. D Wu & D L Olson, 2010. "Enterprise risk management: coping with model risk in a large bank," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 61(2), pages 179-190, February.
    9. Mark Farrell & Ronan Gallagher, 2015. "The Valuation Implications of Enterprise Risk Management Maturity," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 82(3), pages 625-657, September.
    10. William F. Sharpe, 1964. "Capital Asset Prices: A Theory Of Market Equilibrium Under Conditions Of Risk," Journal of Finance, American Finance Association, vol. 19(3), pages 425-442, September.
    11. Eugene F. Fama & Kenneth R. French, 2004. "The Capital Asset Pricing Model: Theory and Evidence," Journal of Economic Perspectives, American Economic Association, vol. 18(3), pages 25-46, Summer.
    12. Robert E. Hoyt & Andre P. Liebenberg, 2011. "The Value of Enterprise Risk Management," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 78(4), pages 795-822, December.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Risk; Risk Management; Risk Factors; Enterprise Risk Management.;
    All these keywords.

    JEL classification:

    • G00 - Financial Economics - - General - - - General
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies

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