DETERMINANTS OF ENTERPRISE RISK MANAGEMENT (ERM) EFFECTIVENESS

Abstract

This study examines determinants of enterprise risk management (ERM) effectiveness.Previous studies suggest that find evidence supporting an indirect effect of risk awareness onRM effectiveness. Furthermore, there is a need for an integrated approach to ERM. Based onsurvey data, the reserachers find evidence supporting an indirect effect of risk awareness onRisk Management (RM) Effectiveness. The study supports the use of risk tools strengthens therelationship between risk awareness and RM effectiveness. Moreover, risk awareness has apositive effect on RM through strategy integration, which helps managers to better recognizeand evaluate the risks. There is an indirect effect of risk awareness to ERM through risk tools.This study contributes to management accounting that there is a need of more intensesocialization and understanding to increase risk-conscious behavior in organization. This willlead to important information to determine risk awareness effectives. This study also has itslimitations. First, despite the sample size that relatively small, the sufficient to perform theintended analysis. Second, there may be other characteristics of ERM processes that were notreflected in this study. Future research could explore the aspects of ERM with more specificrespondents, such as those involved in initiating risk management programs and relevantregulators. Another area for future research is more specific factors that determines to thesuccess of an ERM system.