ENTERPRISE RISK MANAGEMENT AWARENESS AND ITS IMPLEMENTATION ON PERFORMANCE OF SERVICE FIRMS IN NIGERIA

Joshua S. Adeleye, Ogorchukwu A. Isimoya, Johnson O. Adelakun

Abstract


Following the increasing number of fold ups as well as mergers and acquisitions in service sector, a number of concerns as regard issues leading to their folding up have been speculated. It is believed by considering risk management in a holistic form through the adoption of enterprise risk management (ERM) to critical areas of business rather than relying on a silo-based risk management perspective, will increase both the organisation's short and long-term value to its stakeholders. Consequently, this study attempts to: investigate the level of ERM awareness in selected service firms by verifying the challenges affecting ERM adoptions; examine effect of enterprise risk management on business decision; investigate whether ERM adoption leads to operational efficiency; and examine the effect of ERM on organisation performance in selected service firms in Nigeria. A total of 74 firms including banks and insurance companies were considered. Data were collected from both the middle and top levels management of the selected firms in Lagos metropolis. Descriptive and non-parametric statistics were used to analsyse the data. The findings revealed that service firms have good level of ERM awareness, even though its adoption poses serious challenges to the selected firms. The study also found that there is improvement in business decisions and operational efficiency of selected service firms following the adoption of ERM. Finally, most service firms are more likely to experience improved internal decisionmaking, and increased business performance due to good implementation of ERM. Based on these findings, the study concluded that there is strong level of ERM awareness and implementation among the selected firms but many of them still battle with implementation challenges such as difficulty in integrating risk management with other business process as well as lack of clarity on who is responsible for managing risk. All of these in turn have practically hindered them from operating at full capacity. In light of this, the study recommends that the selected service firms need to device means to integrate risk managements with other business processes and seek the necessary knowledge and skills within the organisations to effectively implement ERM in their firms.

Keywords


ERM awareness, business decision, risk management, service firms.

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International Journal of Management Science Research ISSN ISSN 2536 – 605X(Print)

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