Enterprise Risk Management: Review, Critique, and Research Directions

© 2014 Elsevier Ltd. Many regulators, rating agencies, executives and academics have advocated a new approach to risk management: Enterprise Risk Management (ERM). ERM proposes the integrated management of all the risks an organization faces, which inherently requires alignment of risk management with corporate governance and strategy. Academic research on ERM is still in its infancy, with articles largely in accounting and finance journals but rarely in management journals. We argue that ERM offers an important new research domain for management scholars. A critical review of ERM research allows us to identify limitations and gaps that management scholars are best equipped to address. This paper not only identifies how management scholars can contribute to ERM research, but also points out why ERM research (and practice) needs management research for its development

Mineral magnetism of dusty olivine:A credible recorder of pre-accretionary remanence

The magnetic properties of olivine-hosted Fe-Ni particles have been studied to assess the potential of “dusty olivine” to retain a pre-accretionary remanence in chondritic meteorites. Both body-centered (bcc) and face-centered cubic (fcc) Fe-Ni phases were formed by reduction of a terrestrial olivine precursor. The presence of Ni complicates the magnetic properties during heating and cooling due to the fcc-bcc martensitic transition. First-order reversal curve (FORC) diagrams contain a central ridge with a broad coercivity distribution extending to 600 mT, attributed to non-interacting single-domain (SD) particles, and a “butterfly” structure extending to 250 mT, attributed to single-vortex (SV) states. SD and SV states were imaged directly using electron holography. The location of the SD/SV boundary is broadly consistent with theoretical predictions. A method to measure the volume of individual SD particles using electron holography is presented. Combining the volume information with constraints on coercivity, we calculate the thermal relaxation characteristics of the particles and demonstrate that the high-coercivity component of remanance would remain stable for 4.6 Ga, even at temperatures approaching the Curie temperature of pure Fe. The high coercivity of the particles, together with the chemical protection offered by the surrounding olivine, is likely to make them resistant to shock remagnetization, isothermal remagnetization and terrestrial weathering, making dusty olivine a credible recorder of pre-accretionary magnetic fields

Multidimensional Facets of Perceived Risk in Mobile Travel Booking

Despite the growing prevalence of smartphones in daily life and travel context, travellers still perceive an extent of risk associated with using their smartphone to book travel products. In order to alleviate or reduce perceived risk, it is important to better understand the dimensions of and the factors that contribute to perceived risk. This study analysed 411 responses from an online panel to examine perceived risk in mobile travel booking and identified the following facets: time risk, financial risk, performance risk, privacy/security risk, psychological risk, physical risk, and device risk. Several antecedents of perceived risk were identified. Perceived collection of personal information via smartphones contributes positively, while consumer innovativeness, trust, and visibility contribute negatively to perceived risk. Further, the predictive validity of perceived risk is confirmed as it significantly explains perceived usefulness, attitude, and behavioural intention in mobile travel booking. Implications to manage perceived risk and its antecedents are provided

Measurement of the scintillation time spectra and pulse-shape discrimination of low-energy beta and nuclear recoils in liquid argon with DEAP-1

The DEAP-1 low-background liquid argon detector was used to measure scintillation pulse shapes of electron and nuclear recoil events and to demonstrate the feasibility of pulse-shape discrimination (PSD) down to an electron-equivalent energy of 20 keV. In the surface dataset using a triple-coincidence tag we found the fraction of beta events that are misidentified as nuclear recoils to be $<1.4\times 10^{-7}$ (90% C.L.) for energies between 43-86 keVee and for a nuclear recoil acceptance of at least 90%, with 4% systematic uncertainty on the absolute energy scale. The discrimination measurement on surface was limited by nuclear recoils induced by cosmic-ray generated neutrons. This was improved by moving the detector to the SNOLAB underground laboratory, where the reduced background rate allowed the same measurement with only a double-coincidence tag. The combined data set contains $1.23\times10^8$ events. One of those, in the underground data set, is in the nuclear-recoil region of interest. Taking into account the expected background of 0.48 events coming from random pileup, the resulting upper limit on the electronic recoil contamination is $<2.7\times10^{-8}$ (90% C.L.) between 44-89 keVee and for a nuclear recoil acceptance of at least 90%, with 6% systematic uncertainty on the absolute energy scale. We developed a general mathematical framework to describe PSD parameter distributions and used it to build an analytical model of the distributions observed in DEAP-1. Using this model, we project a misidentification fraction of approx. $10^{-10}$ for an electron-equivalent energy threshold of 15 keV for a detector with 8 PE/keVee light yield. This reduction enables a search for spin-independent scattering of WIMPs from 1000 kg of liquid argon with a WIMP-nucleon cross-section sensitivity of $10^{-46}$ cm$^2$, assuming negligible contribution from nuclear recoil backgrounds.Comment: Accepted for publication in Astroparticle Physic

Perceptions of animal physiotherapy amongst Irish veterinary surgeons

The aim of this study was to investigate veterinary surgeons' perceptions, knowledge and use of animal physiotherapy in the Republic of Ireland. A questionnaire was developed and sent to 200 veterinary surgeons, of which 97 were returned. Results indicated that 77 (79%) of respondents were aware of animal physiotherapists. Common sources of information included veterinary colleagues, owners and professional journals, with physiotherapists themselves and undergraduate training being less commonly cited. Awareness of animal physiotherapy was greatest amongst those working in equine practice (χ2 = 5.7, df 1, p = 0.017); they were more knowledgeable about its techniques (t = 2.806, df 75, p = 0.006) and more likely to refer (χ2 = 48.36, df 1, p = 0.0001). Seventy-four respondents (96%) thought that more research was necessary to increase the evidence base for animal physiotherapy. If this branch of physiotherapy is to develop, there needs to be increased interaction and co-operation between veterinary surgeons and chartered animal physiotherapists

Risk propensity in the foreign direct investment location decision of emerging multinationals

A distinguishing feature of emerging economy multinationals is their apparent tolerance for host country institutional risk. Employing behavioral decision theory and quasi-experimental data, we find that managers’ domestic experience satisfaction increases their relative risk propensity regarding controllable risk (legally protectable loss), but decreases their tendency to accept non-controllable risk (e.g., political instability). In contrast, firms’ potential slack reduces relative risk propensity regarding controllable risk, yet amplifies the tendency to take non-controllable risk. We suggest that these counterbalancing effects might help explain observation that risk-taking in FDI location decisions is influenced by firm experience and context. The study provides a new understanding of why firms exhibit heterogeneous responses to host country risks, and the varying effects of institutions

Trust in financial services: the influence of demographics and dispositional characteristics

So far, very little attention has been paid to examining consumer perceptions of trust from an interdisciplinary perspective. The purpose of this study is to examine how consumer trusting belief and disposition to trust within the financial services sector vary on the basis of individual demographic differences in trust. The research provides new insights into how consumers with higher dispositional trust have higher institutional trust and higher trusting belief and how consumers’ trusting belief significantly differs according to their demographic background in terms of age, marital status, ethnicity and gross annual income. The findings offer useful insights for the managers in financial institutions to carefully consider the impact of the influence of these individual differences on consumer behaviour in order to serve the needs of consumers in their target market and be able to design financial products and develop trust building strategies to attract and retain them. They also call for the action of the regulators and the financial institutions to play their part in building strong institutional systems that contribute to engendering higher levels of consumer trust

Strategic implications of valuation methods

Author's OriginalStrategy is ultimately aimed at creating shareholder value, placing valuation in a central role linking finance and strategy. Focusing on growth options, this paper uses a unique "perfect information" model to examine, from a strategy point of view, the relationship between the market value of the firm and its intrinsic, or DCF, value. Although the research is at the level of the firm, the results have implications at the level of individual strategies and projects, since a firm can be conceptualized as a collection of projects. The findings highlight the relationship between the value of growth options and macroeconomic conditions, industry characteristics, and firm-specific factors. A revised version of this paper has since been published in the journal Advances in Strategic Management. Please use this version in your citations.Alessandri, T. M., Lander, D. M., & Bettis, R. A. (2007), Strategic Implications of Valuation: Evidence from Valuing Growth Options, in Professor Brian Silverman (ed.) Real Options Theory. Advances in Strategic Management, 24, 459-48

Stretch goals and the distribution of organizational performance

Many academics, consultants, and managers advocate stretch goals to attain superior organizational performance. However, existing theory speculates that, although stretch goals may benefit some organizations, they are not a “rule for riches” for all organizations. To address this speculation, we use two experimental studies to explore the effects on the mean, median, variance, and skewness of performance of stretch compared with moderate goals. Participants were assigned moderate or stretch goals to manage a widely used business simulation. Compared with moderate goals, stretch goals improve performance for a few participants, but many abandon the stretch goals in favor of lower self-set goals, or adopt a survival goal when faced with the threat of bankruptcy. Consequently, stretch goals generate higher performance variance across organizations and a right-skewed performance distribution. Contrary to conventional wisdom, we find no positive stretch goal main effect on performance. Instead, stretch goals compared with moderate goals generate large attainment discrepancies that increase willingness to take risks, undermine goal commitment, and generate lower risk-adjusted performance. The results provide a richer theoretical and empirical appreciation of how stretch goals influence performance