Enterprise risk management and business performance during the financial and economic crises

Increased volatility in the business world has exposed the inadequacy of traditional but fragmented approaches to risk management. This has led to an integrated approach to measuring and managing risks known as enterprise risk management (ERM). While past studies of ERM disclosures have examined it within the context of corporate governance and internal control, its relationship to business performance has received little attention. While firm performance changed radically between 2008 and 2009 during the financial crisis and economic recession, only minor increases in risk exposure, risk consequence or risk management strategies were found from 2007 to 2008. ERM information does not predict or have any appreciable effect on business performance.

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