DETERMINANTS OF ENTERPRISE RISK MANAGEMENT (ERM) EFFECTIVENESS

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Driya Sudaryono
Yvonne Augustine
Bambang Sudaryono

Abstract

This study examines determinants of enterprise risk management (ERM) effectiveness.
Previous studies suggest that find evidence supporting an indirect effect of risk awareness on
RM effectiveness. Furthermore, there is a need for an integrated approach to ERM. Based on
survey data, the reserachers find evidence supporting an indirect effect of risk awareness on
Risk Management (RM) Effectiveness. The study supports the use of risk tools strengthens the
relationship between risk awareness and RM effectiveness. Moreover, risk awareness has a
positive effect on RM through strategy integration, which helps managers to better recognize
and evaluate the risks. There is an indirect effect of risk awareness to ERM through risk tools.
This study contributes to management accounting that there is a need of more intense
socialization and understanding to increase risk-conscious behavior in organization. This will
lead to important information to determine risk awareness effectives. This study also has its
limitations. First, despite the sample size that relatively small, the sufficient to perform the
intended analysis. Second, there may be other characteristics of ERM processes that were not
reflected in this study. Future research could explore the aspects of ERM with more specific
respondents, such as those involved in initiating risk management programs and relevant
regulators. Another area for future research is more specific factors that determines to the
success of an ERM system.

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Author Biography

Yvonne Augustine, Universitas Trisakti

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