Enterprise risk management

Abstract

Enterprise risk management (ERM) takes a broad perspective on identifying the risks that could cause an organisation to fail to meet its objectives and strategies. Although there are several procedures for recognising risks, the contribution by this thesis is to lay emphasis on the application of Enterprise Risk Management in the context of smaller companies, particularly those that are Insurance-based and operate in the GCC. This study aims to evaluate ERM practices of Islamic insurance companies in Saudi Arabia, the United Arab Emirates, and Qatar. Research on planning for risk and the importance of having the knowledge and expertise to work with it to provide a meaningful gap analysis and improve the risk assessment process is obtained from secondary data. Also, assessed is the accuracy of the concept that ERM-adopting firms are better able to recognise the benefits of inherent risk and prioritise away from the risks that contribute most to the total risk of the business and work towards those that optimise the evaluation and selection of instruments. This evaluates the question, through data obtained from secondary research, of planning for risk, and also to have knowledge and expertise to work with it to provide a meaningful gap analysis, improve the risk assessment process, and suggest risk mitigation strategies. vii Some practical ERM implementation considerations are reviewed qualitatively and quantitatively by building a case for ERM and the return on investment (ROI) of ERM, respectively. Our findings are consistent with this theory proposed by Crouhy (2001) which explains that a negative VaR would imply the portfolio has a high probability of making a profit. Recommendations on risk mitigation strategies, which ultimately target improved efficiency in enterprises, are proposed. Some include risk ranking, validation of risk impact, and benchmarking. Any organisation—large or small; public or private — that has a stakeholder with expectations for a favourable outcome in business can benefit from the tools and techniques contributed in this thesis