Multiple Perspectives in Risk and Risk Management (eBook)

Preface 5
Contents 7
Reviewers 9
Risk Disclosures and Risk Communication 10
Directors’ Duties and Risk Governance 11
1 Introduction 12
2 Board Risk Oversight: An Overview 14
2.1 Risk Oversight and Directors’ Duties 14
2.2 Drivers that Elevate Expectations on Board Risk Oversight 15
2.3 Risk Oversight and Directors’ Duties 17
3 Defining the Perimeter and Contents of Board Risk Oversight 18
3.1 The Foundations of Board Risk Oversight: The Notions of Risk and Uncertainty 18
3.2 Board Risk Oversight and the Use of Risk Models 22
3.3 Risk Oversight and Risk Management: Integration and Substitution 23
4 Operationalising the Concept of Risk Appetite 24
4.1 A Simplistic View of a Complex Concept 24
4.2 The Pivotal Role of Risk Appetite in Corporate Governance Guidance 26
4.3 The Notion of Risk Appetite in the Financial Industry 27
4.4 Criticalities in the Implementation of Risk Appetite 28
5 Directors’ Duties and Risk Governance 33
6 Concluding Remarks 37
References 39
Enterprise Risk Management Measurement: Insights from an Interdisciplinary Literature Review 44
1 Introduction 45
2 Research Design 47
2.1 Article Search 47
2.2 Journal Classification and Citations 47
2.3 Content Analysis 48
2.4 Seminal Articles from the ERM Literature 49
3 ERM Articles by Discipline, Citations and Geography 49
3.1 ERM in Various Academic Disciplines Literature 49
3.2 Journal H Index and Article Citations 52
3.3 Location of the Studies and Reference to Frameworks 53
4 Measurement of ERM and ERM Practices 53
4.1 Qualitative Studies on ERM 54
4.2 Quantitative Studies on ERM 55
5 Concluding Remarks 58
5.1 Originality and Value of the Study 58
5.2 Limitations of the Study 58
5.3 Future Research Directions 58
References 60
Accounting, Soci(et)al Risks, and Public Reason: Governmental Risk Discourses About the ILVA Steel Plant in Taranto (Italy) 62
1 Introduction 63
2 Accounting, Risks and Public Reason: Prior Research 65
3 Theoretical Framework 66
4 Methodology 68
5 Findings 72
5.1 The Italian Judiciary’s Intervention and the Experts’ Appraisals 72
5.2 The Emergence of the Social and Societal Risks in the Experts’ Appraisals 74
5.3 The Italian Government’s Decision on ILVA’s Activities 79
5.4 The Construction of Risk Discourse by the Italian Government 79
6 Discussion and Conclusions 87
References 91
(In)Consistency Between Private and Public Disclosure on Enterprise Risk Management and Its Determinants 94
1 Introduction 95
2 Theoretical Background and Hypotheses Development 98
2.1 Determinants Hypothesized to Affect Inconsistency on ERM Disclosure 99
3 Research Design 101
3.1 Sample Selection and Data: The Italian Institutional Context 101
4 Three-Stage Approach 104
4.1 Research Model for Testing Hypotheses 106
5 Results and Analysis 110
5.1 Nature and Extent of ERM Disclosures Variation (RQ1) 110
5.2 Determinants of Inconsistency Between Private Source of Information and Public Disclosure on ERM (RQ2) 113
6 Discussion and Conclusions 119
Appendix: Survey 123
References 127
Forward-Looking Information Disclosure as a Risk Factor in Accounting—The Case of Poland 131
1 Introduction 132
2 Theoretical Background 133
2.1 Definition of Risk 133
2.2 Risk in Accounting 134
2.3 Forward-Looking Disclosures 136
3 Research Design and Methodology 138
3.1 Sample and Data Collection 138
3.2 Content Analysis and Text Analysis Software 138
4 Results and Discussion 140
5 Conclusion 143
References 144
Implementation of Risk Management 148
Financial Slack and Company’s Risk Retention Capacity 149
1 Introduction 149
2 Financial Slack and Its Measures 150
2.1 The Understanding and Functions of Slack as a Resource 150
2.2 Taxonomy and Measures of Slack Resources 152
2.3 Financial Slack in the Taxonomy of Slack Resources 155
3 Determination of Company’s Risk Retention Capacity with the Financial Slack Approach 159
4 Illustration of the Assessment of Risk Retention Capacity with Reference to Sector Benchmarks 163
4.1 Research Design and Method 163
4.2 Findings and Discussion 164
5 Conclusions 168
References 169
Agent-Based Model of Risk Assessment: A Distributed Cognition Approach 173
1 Introduction 173
2 Modeling Risk Assessment 175
2.1 Risk Assessment as Sensemaking 175
2.2 Risk Assessment Process Model 176
2.3 Constraint Satisfaction Network 177
2.4 Agent Interaction 180
3 Discussion and Conclusion 181
References 182
Small & Medium-Sized Enterprise Risk Monitoring Based on Financial Analysis Results
1 Introduction 183
2 Literature Review 184
3 eanaliza.pl as a Risk Monitoring Tool 186
4 Risk Monitoring in Practice—A Sample Study 189
5 Conclusions 193
References 194
Risk Management in German Leasing SMEs—A Qualitative Study 196
1 Introduction 196
2 Theoretical Background 198
3 Research Methodology 200
3.1 Reasons for Applying Qualitative Research 200
3.2 Sample Selection 200
4 Research Findings 201
4.1 Interviews with Leasing SMEs 201
4.2 Development of a Framework on Enterprise-Wide Risk Management 204
4.3 Scoring of Typologies and Life Cycles 206
5 Conclusions 208
5.1 Status Quo of Risk Management 208
5.2 Novelty/Contribution to Knowledge 209
6 Limitations and Recommendations for Further Research 210
References 210
What Is the Worst Scenario? Modeling Extreme Cyber Losses 213
1 Introduction 214
2 Literature Review and Methodology 216
3 Dataset 219
4 Results and Discussion 221
5 Conclusions 230
References 231
Risk Management in Automation of the Accounting Process 233
1 Introduction 233
2 Conceptual Framework 235
2.1 Robotic Process Automation (RPA) 235
2.2 Process of Automation 236
3 Case Study: RPA Tool as an Example of Supporting Company Internal Reporting Process 238
4 Conclusions 239
References 241
Risk as a Societal and Macro-economic Concern 242
The Gains and Losses Puzzle in Discounting for Long-Term Investments: Reinterpreting Ramsey Approach for Intergenerational Perspective 243
1 Introduction 243
2 Issues in Discounting for Project Appraisal Under Risk and Uncertainty 245
2.1 Uncertainty and Its Impact on Discount Rates: Long-Term Versus Myopic Perspective 245
2.2 Uncertainty and Its Impact on Discount Rates: Long-Term Versus Myopic Perspective Magnitude Effects for Costs and Benefits 247
3 Restructuring Social Discount Rate Under Uncertainty and Intergenerational Perspective 248
3.1 Intergenerational Framework in Discounting: Individual, Social and Extended-Social Perspective 248
3.2 Redefining the Ramsey Formula Components 250
3.3 Risk Aversion in Intergenerational Framework: Sign and Scale Effects in Intergenerational Discounting 252
4 Intergenerational Framework in Discounting: Individual, Social and Extended-Social Perspective 255
5 Conclusions 257
References 258
Relationships Between Financial Inclusion and Financial Stability and Economic Growth—The Opportunity or Threat for Monetary Policy? 261
1 Introduction 262
2 Financial Inclusion as the Supporting Process to Monetary Policy in the Pursuit to Financial Stability 264
3 The Meaning of Financial Inclusion for Economic Development 270
4 Conclusions 274
References 275
Risk Management in Central Banks in the Context of Monetary Policy Normalization 279
1 Introduction 279
2 Risk Management in Commercial and Central Banks 280
3 Main Areas of Risk in Times of Monetary Policy Normalization 282
4 Summary 287
References 288
Fund Transfer Pricing and Its Impact on Bank Liquidity Measures 290
1 Introduction 290
2 Liquidity Risk and Liquidity Risk Measures 291
3 FTP and Liquidity Risk Management 293
4 FTP Impact on Liquidity Measures 294
5 Conclusions 296
References 297
Cyber Risk in Financial Institutions: A Polish Case 299
1 Introduction 300
2 Conceptual Framework—The Understanding of Cyber Risk 300
2.1 The Definition and Types of Cyber Risk 300
2.2 Cyber Attacks 302
3 Financial Institutions Cyber-Attacks in Poland 303
4 The Need of Cyber Security 305
4.1 Cyber Security System 305
4.2 The Weakest Point of Cyber Security 307
5 The Challenges of Managing Cyber Risk 308
6 Conclusions 309
References 310