Benefits of Enterprise Risk Management: A Systematic Review of Literature

Abstract

Objective: In an enhanced climate of risk complexities, the firm's stakeholders desire a risk management framework that promises the benefits of efficiencies, transparencies, and solutions for interrelated risks. Enterprise risk management (ERM) is widely seen as a suitable instrument to address these issues. However, not all are convinced of ERM's benefits. This necessitates a review of extant literature and collating it to generate interrelated insights. This paper reviews articles on ERM from the management and finance domain and catalogs the benefits of ERM. Methodology/Technique: This paper reviews 129 articles addressing ERM benefits. It examines the academic disciplines of journals publishing ERM studies by looking into their H Indices, SJR scores, and ABDC rankings to assess ERM's impact and acceptability among scholars. The research articles are analyzed for their subject domains, geographic scope, and methodology used in exploring the relationship between ERM adoption and its benefits to the firm. Collating and reviewing these articles enables the mitigation of data gaps. These studies were primarily from accounting, finance, management, corporate governance, and strategy domains. Findings: Improved cost-effectiveness, earnings stability, increased profitability, improved decision making, better risk communication, competitive advantage, better resource allocation, enhanced firm value, and performance are the key benefits of ERM adoption identified in this study. A knowledge gap is presented around assessing ERM benefits and extending ERM research scope to developing countries like India. Novelty: The study catalogs the benefits of ERM and makes a strong case for ERM adoption among firms. Type of Paper: Review JEL Classification: M10, M14, G30, G32 Keywords: Enterprise risk management (ERM); firm value; firm performance; ERM benefits; Covid19 Reference to this paper should be made as follows: Naik, S; Prasad, Ch.V.V.S.N.V. (2021). Benefits of Enterprise Risk Management: A Systematic Review of Literature, Journal of Finance and Banking Review, 5 (4): 28 – 35. https://doi.org/10.35609/jfbr.2021.5.4(3)