Exploring Enterprise Risk Management: A Case Study with a Global Manufacturer of High Technology Products with Operations in Sweden

University essay from Lunds universitet/Avdelningen för Riskhantering och Samhällssäkerhet; Lunds universitet/Riskhantering (CI)

Abstract: The purpose of this thesis is to investigate how Enterprise Risk Management (ERM), with an emphasis on risk aggregation, is conducted in practice. The thesis starts with a scoping study to review available literature on ERM. The findings from the scoping study show that literature focus on how ERM impacts certain financial variables, e.g. return on assets, return on equity, and firm value of organizations. Normative elements of ERM are also found in the literature. The findings from the scoping study further indicate a gap in the literature on risk aggregation in ERM contexts. Additional literature on risk aggregation was reviewed but in other contexts than ERM. A case study with one case company was conducted to understand how ERM is conducted in practice in a company and how ERM can be improved. The findings show that the case company has implemented ERM and have procedures in place for ERM, including procedures on aggregation of risks. Several normative elements of ERM described in literature aligns with ERM in the case company: ERM integration with strategy and objectives, organizational aspects of ERM, e.g., top management involvement, centralized ERM unit, and committees. Necessary components for successful risk aggregation found in literature (not ERM context) aligns with findings in the case company. Improvement suggestions for ERM are aimed at improving the process of selecting what risks to prioritize, increasing background knowledge in risk descriptions, and ensuring that risks have connections to events or scenarios.

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