Annotated Bibliography: ERM Practices in Financial Institutions

This annotated bibliography provides an overview of Enterprise Risk Management (ERM) practices within financial organizations. It includes summaries of key articles and studies focusing on various aspects of ERM, such as risk assessment, risk management control, and the impact of ERM on financial performance. The bibliography covers topics like the balance between reward and risk, the role of risk models, and the integration of risk management into organizational governance. It also explores the value of ERM, including its effect on reducing costs, improving profitability, and enhancing the monitoring of financial solvency. The included sources address how ERM contributes to operational decisions, strategic alignments, and stakeholder responsiveness, offering insights into both quantifiable and non-quantifiable risks. Furthermore, the bibliography examines the challenges and benefits of ERM, providing a comprehensive understanding of its role in financial institutions.

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Annotated Bibliography
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Topic: ERM in financial organization
Soin, K., & Collier, P. (2013). Risk and risk management in management
accounting and control.
In this article, the primary focus is to intensified interest and refocus on the
demonstration of the risk and the system manages the risk. This article also provides
information about the risk, risk in management accounting and the risk management control
practices. Risk can be successfully achieved in both sectors public as well as private, by
exchanging the organizational risk management control practices. The risk management
issues with financing sector such as derivatives, value-at-risk, and to account sector are the
disclosure of the financial report. These are the risks among management accounting and
management control, where it needs to employ several management accounting concerns.
This article also focuses on various probable side effects in financial risk management
involves issues of accountability and trust. However, it has also be focused on defensive risk
or secondary risk management factors and an increase in reputation risk.
Lam, J. (2014). Enterprise risk management: from incentives to controls. John
Wiley & Sons.
According to the author, risk management can be successfully done by balancing
reward and risk factors. Risk models and products play a crucial role in managing risks in a
financial organization. The author highlighted in the process of developing, evaluating new
products, training and hiring fresh employees in the organization, measure the performance of
that employee, to maintain a principle that helps to increase the revenue, risk management
and business objectives. In this article, specific risk factors have been highlighted. The author
also discussed in the survey that the seven rule for evolving a financial, organizational risk

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regulatory program, including the risk controlling function, strictly minimizing risk at down-
side that supports performance optimization.
Eckles, D. L., Hoyt, R. E., & Miller, S. M. (2014). Reprint of: The impact of
enterprise risk management on the marginal cost of reducing risk: Evidence from the
insurance industry.
Journal of Banking & Finance,
49, 409-423.
In this article, the major focus on practicing of managing the risk in the financial
organization to reducing firms cost so that the risk can be reduced. The concept of financial
risk management says that the organization having contracting costs, simple cash-flows of tax
liabilities at a lower level of expectation, financial distress budgets, telling that to adds value
to the organization financial control risk management are required. From this theory, in 2003,
almost 92% of the worlds, 500 largest companies report using derivatives. After the
implementation of the ERM, the increasing incentive profitability reduced to low-level risk.
Therefore, by extending the risk management cash-flow, volatilities and earnings can be
reduced. The regulators and investors can also be facilitated from this to monitor and evaluate
the financial organization's solvency risk and performance. However, it is also revealed that
the operational profitability per unit in the risk (for example, return volatility or ROA) helps
to increase the implementation of post-ERM.
Baxter, R., Bedard, J. C., Hoitash, R., & Yezegel, A. (2013). Enterprise risk
management program quality: Determinants, value relevance, and the financial crisis.
Contemporary Accounting Research,
30(4), 1264-1295. https://doi.org/10.1111/1911-
3846.12294
In this article, the major focus is to integrate and evaluate risk management from a
different perspective. ERM can be defined as a commercial governance methodology which
coordinates and constrains the behavior of managers’ in the financial organization. The above survey

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investigate two primary reason: first, the factors those are related to the ERM programs with high
quality which is produced by “Standard & Poor’s (S&P)”, measured by valuations and second,
benefits that come from the more top quality ERM by realizing the performance, rewarding the
quality of the program and reducing the uncertainty to bring the optimal risk management control to
the organization. The effective ERM supports protection against the lower tail results of the program,
the companies those are at risk may claim better plans, and the organization may implement the
system resources that are absent from their personnel. The analysis of outcomes also highlighted
ERM which is related to less audit associated with risk, i.e., active internal controls and stable auditor
relations, boards related to longer tenure, the improvement of corporate governance, i.e., the audit
committee’s claim charges associated to inaccuracy of risk management and the risks being there in
the committees or officers.
Sweeting, P. (2017).
Commercial enterprise risk management. Cambridge
University Press.
According to the author, the financial, organizational risks can be improved by
making operational decisions, strategic alignments, promoting the responsiveness of various
sources involved in danger among the entire corporate risk appetite. Hence, ERM gives a
better chance to the whole risk level, which is being associated with an organizational risks
management system. The understanding of internal risk management of the entire
environment which require to understand the nature and the interest for the various
stakeholders in the financial organization. The author highlighted the taxonomy for the
organization, and once it is decided, the risk can be divided into quantifiable and non-
quantifiable. Risk management describes the process of continuity. The risk management
process needs to be documented, which involve internal communication to better risk
management to various stakeholders.

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Grace, M. F., Leverty, J. T., Phillips, R. D., & Shimpi, P. (2015). The value of investing
in enterprise risk management.
Journal of Risk and Insurance,
82(2), 289-316.
The primary purpose of this study is to evaluate the performance of risk
management and improve organizational performance. This article focus on the investigation
of the aspects of the enterprise risk management-(ERM) that added value to it. The operating
performance of the organization can be improved by the use of dedicated risk managers and
various financial capital models. The specialized risk management control report requires the
board of directors, which helps to rises its value. The following combination of ERM
advantages that helps to increase the organization value is: a simple financial capital model,
the report from the risk manager to CEO or the board and the risk manager who is dedicated
to the cross-functional committee is required.
Bromiley, P., McShane, M., Nair, A., & Rustambekov, E. (2015). Enterprise risk
management: Review, critique, and research directions.
Long-range planning,
48(4),
265-276. https://doi.org/10.1016/j.lrp.2014.07.005
In this article, the major focus is to focus on the demonstration of the executives,
regulators, rating agencies, academics and the challenges that have supported by an approach
to financial risk management: ERM. This article also provides information about the
Enterprise Risk Management-(ERM) that offers the organizations to identify the potential
risks coherently and comprehensively, rather individually managing them. This research
highlighted that the financial institutions often identify their risks associated with interest rate
variants or currency, an operation that is managed by safety risks and quality, liability and
natural catastrophes that are handled by insurance. In addition, ERM pays off mainly to the
organizations by using an ongoing accounting practice to evaluate their risk effectiveness
factors which minimize its value.