The Influence of ERM on Strategizing - A case study

Abstract: Many have studied how ERM can provide assurance to the achievement of already set strategies (COSO, 2004; 2017; Frigo & Anderson, 2011; Nocco and Stulz, 2006), but few have studied how ERM influences strategizing (Viscelli, Hermanson & Beasley, 2017; Frigo & Anderson, 2011). While Viscelli et al. (2017) found that the extent of ERM influence on strategizing is low, there is still little knowledge about how different organizational areas connected to a ERM system may enable that influence. The purpose of this study is, therefore, to elaborate on how the organizational areas of Culture, Performance, and, Review & Communication may enable ERM to influence strategizing. Within the areas, the study focuses on the importance of key actors, specifically accountants, and processes that create risk awareness and therefore enabling ERM to influence strategizing. This case study investigates one firm in the consumer goods industry by conducting semi-structured interviews with 8 actors in Kerberos to understand how actors, ERM processes, and results may enable ERM to influence strategizing. To analyze our results, we used a modified version of the COSO (2017) framework. Our findings show that organizational areas such as Culture, Performance, and Review & Communication enable ERM to influence strategizing by creating risk awareness. Specifically, one important actor involved in this is the accountant. This study contributes to Fraser and Simkins (2009), Nocco and Stulz (2006), Farrell and Gallagher (2015), and Rasid, Rahman and Ismail (2011) by exemplifying how processes and the overall ERM can assist the Culture, Performance, and Review & Communication areas to enable ERM to influence strategizing by creating risk awareness. This study also contributes to Viscelli et al. (2017) by exemplifying how accountants can allow ERM to have a stronger impact on strategizing.