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Enterprise Risk Management: Framework Presence and Effectiveness
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The field of enterprise risk management (ERM) was born from corporate scandals early in this century.
COSO published its Integrated Framework in 2004, outlining eight ERM components that, when present and
functioning effectively, provide reasonable assurance an organization will meet its objectives. Since then,
organizations have been increasingly urged to adopt risk oversight practices, with research conducted to
measure the level of ERM framework adoption. These studies show varying levels of ERM application, with
minimal evidence of ERM effectiveness. To consolidate existing studies, a fixed effects meta-analysis of
proportions was conducted, revealing a 47.4% level of framework adoption. An experiment was also
performed to determine the effectiveness of ERM methods. A test group was provided training on the ERM
risk assessment method of heat mapping, versus a control group that learned ERM framework history. Both
groups were provided a list of scenarios, and were asked to determine which risks should be mitigated. The
testing group showed improvement in risk-reduction decisions, confirmed by a one-tail t -test, where t (46) =
- 3.57, p = 0.0004, and Cohen’s d of 1.02, indicating a statistically significant difference in group means as a
result of the treatment. These findings highlight an opportunity to conduct additional research to gain greater
insight into organizations that have yet to adopt an ERM framework, while further analysis should also be
conducted into the effectiveness of other ERM tools. Ultimately, this research provides greater impetus for
ERM adoption, potentially critical protections against the next economic downturn.
Erika P. McBride ; St. John Fisher College - Personal Name
NONE
Management
English
1-128
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