The Influence of the Implementation Analysis on the Advanced Risk Management Enterprise : The Role Of Environmental, Social and Governance Performance

Abstract

The objective of this study is to investigate the extent to which Enterprise Risk Management Advanced (ERMADV) implementation impacts firm performance and value moderated by ESG performance. The assessment of ERMADV implementation level is done by using eight components derived from governance and firm operating activities whose measurements are founded on Organization for Economic Cooperation and Development (OECD) principle and COSO ERM-Integrated Framework. Board Gender Diversity, Board of Commissioner Size, Firm Size, Leverage as well as Return on Equity (ROE) were further used in this study as control variables. This study includes companies concerning the manufacture and mining industry that is registered on the Indonesia Stock Exchange website from year 2015 to 2021. The findings of this research show that ERMADV significantly affects firm performance and value. In addition, it was discovered that ESG plays a large moderating influence. ESG suggests that an advanced ERM framework will prioritize risks associated with ESG-related aspects if it is resilient and integrated. As a result, this strategy will direct organizations in developing ethical decision-making strategies, improving financial performance and firm value.