The likelihood value of residual risk estimation in the management of enterprise risk
-
DOIhttp://dx.doi.org/10.21511/imfi.15(3).2018.04
-
Article InfoVolume 15 2018, Issue #3, pp. 49-55
- Cited by
- 2024 Views
-
406 Downloads
This work is licensed under a
Creative Commons Attribution 4.0 International License
A model for estimating the likelihood value of residual risk (Y) is introduced. The model consists of three independent variables: the likelihood value of risk before risk treatment (X1), the quality of risk treatment (X2), and the appropriateness of risk treatment (X3). An experimental research design with a multiple linear regression analysis was used in the estimation. All independent variables, the likelihood value of risk before treatment, the quality of risk treatment, and the appropriateness of risk treatment, can be significantly used to estimate the likelihood value of residual risk. Since no model of estimating residual risk of likelihood had been introduced yet, the findings of this study provide significant contribution to firms or organizations that need to assess the likelihood value of residual risks.
- Keywords
-
JEL Classification (Paper profile tab)C13, C51, D81
-
References26
-
Tables3
-
Figures2
-
- Figure 1. Normal P-P plot: residual probability
- Figure 2. Scatterplot dependent variable: residual probability
-
- Table 1. The quality of risk treatment
- Table 2. The appropriateness of risk treatment
- Table 3. Collinearity statistics
-
- Abdelrafe, E., & Hussin, B. (2011). Estimating quality-affecting risks in software projects. The International Management Review, 7(2), 66-74.
- Anton, T., Lackes, R., & Siepermann, M. (2015). Integration of risk aspects into business process modeling. Paper presented at 4th International Conference on Enterprise Resource Planning, ERP Future 2015, 16-17 November.
- Arena, M., & Azzone, G. (2010). The organizational dynamics of enterprise risk management. Accounting, Organizations and Society, 35(7), 659-675.
- Aven, T. (2011). On the new ISO guide on risk management terminology. Reliability Engineering & System Safety, 96(7), 719-726.
- Bharathy, G. K., & McShane, M. K. (2014). Applying a system model to enterprise risk management. Engineering Management Journal, 26(4), 38-46.
- Bowling, D. M., & Rieger, L. (2005). Success factors for implementing enterprise risk management: building on the COSO framework for enterprise risk management to reduce overall risk. Bank Accounting & Finance, Apr-May, 21.
- Colombini, F. (2015). Risk, regulation, supervision and crises in the European Banking Union. Law and Economics Yearly Review, 4(2), 236-273.
- Cope, E. W., Kuster, J. M., Etzweiler, D., Deleris L. A., & Ray, B. (2010). Incorporating risk into business process models. IBM Journal of Research and Development, 54(3).
- Everson, M. E. A., & Chesley, D. L. (June 2016). Aligning risk with strategy and performance: Executive summary.
- Farrell, M., & Gallagher, R. (2015). The valuation implications of enterprise risk management maturity. Journal of Risk & Insurance, 82(3), 625-657.
- Gatzert, N., & Martin, M. (2015). Determinants and value of enterprise risk management: Empirical evidence from the literature. Risk Management and Insurance Review, 18(1), 29-53.
- Gjerdrum, D., & Peter, M. (2011). The New International Standard on the Practice of Risk Management – A Comparison of ISO 31000:2009 and the COSO ERM Framework. Society of Actuaries, 12, 8-12.
- Hakizabera, A. U., & Ohsato, A. (2010). Early risk assessment in software development life cycle using software metrics. Proceedings of the International Conference on Information Management & Evaluation, 122-128.
- Kountur, R. (2016). Asesmen Risiko Terintegrasi: Quantitative Approach. Jakarta: PT RAP Indonesia.
- Lambert, J. H., Jennings, R. K., & Joshi, N. N. (2006). Integration of risk identification with business process model. System Engineering, 9(3), 187-198.
- Lundqvist, S. A. (2014). An exploratory study of enterprise risk Management: Pillars of ERM. Journal of Accounting, Auditing & Finance, 29(3), 393-429.
- Mitchell, C., Bauknecht, D., & Connor, P. M. (2006). Effectiveness through risk reduction: A comparison of the renewable obligation in England and Wales and the feed-in system in Germany. Energy Policy, 34(3), 297-305.
- Nocco, B. W., & Stulz, R. M. (2006). Enterprise risk management: Theory and practice. Journal of Applied Corporate Finance, 18(4), 8-20.
- Norrman, A., & Jansson, U. (2004). Ericsson’s proactive supply chain risk management approach after a serious sub-supplier accident. International Journal of Physical Distribution & Logistics Management, 34(5), 434-456.
- Salmela, H. H. S. (2008). Analyzing business losses caused by information systems risk: a business process analysis approach. Journal of Information Technology, 23(3), 185-202.
- Suriadi, S. et al. (2014). Current research in risk-aware business process management-overview, comparison, and gap analysis. Communication of the Association for Information Systems, 34(1), 933-984.
- Sweeney, J. C., Soutar, G. N., & Johnson, L. W. (1999). The role of perceived risk in the quality-value relationship: A study in a retail environment. Journal of Retailing, 75(1), 77-105.
- Tabachnick, B. G., & Fidel, L. S. (2013). Using Multivariate Statistics (6th ed.). Boston: Pearson.
- Taylor, A., Artman, E., & Woelfer, J. P. (2012). Information technology project risk management: bridging the gap between research and practice. Journal of Information Technology, 27(1), 17-34.
- Tolbert, G. D. (2005). Residual risk reduction: Systematically deciding what is “safe”. Professional Safety.
- Williamson, D. (2007). The COSO ERM framework: a critique from system theory of management control. International Journal of Risk Assessment and Management, 7(8), 1089-1119.