Risk practitioner experiences of enterprise risk management in financial institutions

Abstract

The ability of financial institutions to strengthen enterprise risk management following the global financial crisis has been challenging. The uncertainties of the external environmental within which these organisations operate and the complexity and speed of internal operations required to respond have continued to evolve. As a result, focus on the discipline of enterprise risk management has emerged, within academia and industry, to determine the broader risk implications to which financial institutions are exposed. A qualitative study was undertaken with 16 risk practitioners engaged in daily risk management activities within financial institutions. The purpose of this research was to explore their experiences of enterprise risk management. This research intended to obtain a view of their involvement in various key components of the discipline, and to determine the challenges experienced with respect to effective management of enterprise risk, according to perception. The results of the study identified a need for key components of enterprise risk management within financial institutions to be more effective in terms of; framework adoption, risk committee oversight, chief risk officer capabilities, and risk practitioner and business stakeholder education and coordination of risk. The main findings identified the need for an evolved enterprise risk management model that acknowledged these key components and which were incorporated into an existing model. The results of this research provided additional insight to enhance the development of the enterprise risk management discipline within financial institutions.