ABSTRACT
The empirical studies on ERM implementation and eventual performance effects remain rather inconclusive partially due to imperfect measures of the ERM construct and different performance indicators that circumvent comparative studies with cumulative insights. Despite unequivocal results, the evidence seems to show that ERM is induced by organizational size, institutional ownership, and specific industry contexts, which suggests that implementation is a function of resource availability, expectations, and regulatory pressures. However, the systematic ERM process to set objectives, identify risks, analyzing and treating the risks, and subsequently monitoring exposures is consistent with the rational decision-making model, and resembles the elements of the strategic planning process. This indicates that the processes can be combined where ERM may help uncover the risk profile of alternative strategic options, or provide environmental risk scanning for the strategy analyses. The management field has demonstrated the importance of strategic issue selling as a way to bring important insights to the attention of top management serving a similar function as risk identification across the dispersed business units. Hence, there are indications that adherence to the ERM principles of risk identification and assessment can have significant performance effects if mediated by strategic planning.
