Torben Juul Andersen co-authors new article
Torben Juul Andersen, Johanna Sax & Alessandro Giannozzi:
Conjoint effects of interacting strategy-making processes and lines of defense practices in strategic Risk Management: An empirical study.
Long Range Planning (In Press)
In the face of risky business environments, and not least in wake of the global financial crisis 2008-2009, there has been an increased focus on risk management reporting driven by public expectations, regulation, and corporate law. To support these mounting requirements, professional associations and public policy-makers have recommended adoption of formal enterprise risk management (ERM) frameworks.
Now – do the policies work?
The new study addresses this question based on unique survey data from among the 500 largest companies in Denmark.
The findings indicate that local responses to emergent events and strategic planning considerations have stronger positive associations with firm performance compared to adoption of formal enterprise risk management (ERM) frameworks.
The good news is that adherence to the principles of ERM is linked to positive performance outcomes but these effects are substantially enforced by decentralized responses and central strategic considerations. Hence, it is not sufficient to adopt formal risk management practices to deal with impending risk events. Instead, the ability to deal effectively with uncertain and unknown conditions hinges on local responses and ongoing strategic reflections.