Enterprise-Wide Risk ManagementEnterprise-Wide Risk ManagementIn essence, EWRM drives value creation through Earnings, Growth, Capital, Efficiency, Volatility ofEarnings & Capital, Management Competence and Shareholder Value. Thus, EWRM is a multi-stepprocess that involves both the upside and downside impact of all potential sources of risk and alsoserves as an integrated enterprise-wide correlation-adjusted approach of managing risks (Hoyt &Liebenberg, 2006).As a value-added tool, EWRM provides an essential framework for better management of shareholdervalue. In addition, EWRM provides the vital mechanism to business enterprises for betterunderstanding, management and communication of risk appetite and potential exposures facing thebusiness entities on the whole. Also, EWRM is not just about responsibilities. It is primarily about theway how people work and the way how they relate to the strategy and growth in order to achieve thecompanys objective (Pickett, 2006).It is rather important to note that the underlying concept of EWRM is to enhanceshareholders/stakeholders value and this relates to each type of organization whether profit, nonprofit,or government agency, provides value for its stakeholders (COSO, 2003). This had beenstressed in the definitions of EWRM and in the EWRM concept itself. Miller (1992), Deloach (2000),Stroh (2005) and Panning (2006) all agreed that the function of EWRM is to drive value creation,either in terms of financial and non-financial aspects.This research work examines the adoption and eventual implementation of Enterprise-Wide RiskManagement (EWRM) as a value-added tool in enhancing the economic value of business enterprises.In this respect, the main objective of such a study is to find out the extent to which the specificcorporations in selected sector of the Malaysian industry have actually implemented the increasinglypopular EWRM program and also to assess the value implications of this program. This research workundoubtedly provides a valuable insight of EWRM as an important concept of managing risks on anenterprise-wide basis among major corporations in Malaysia. For this, a qualitative approach(including personal interviews) was adopted and reference was also made on annual reports available.2.1. Research MethodsIn order to ensure this research is in line with the objectives, the following features explain themethodology used with some relevant criteria in selecting the participants for this study.2.1.1. Research CriteriaThe main criteria set for selecting the twenty (20) companies for this research work are the companieswhich were selected that meet the diverse varieties of Main Board companies in the Malaysia Bourse[formerly known as Kuala Lumpur Stock Exchange (KLSE)]. Such diversities include Consumerproducts, Industrial products, Trading and services, Construction, Property, Mining and Plantation. Inaddition, these companies comply with some criteria of major corporations as defined by Yazid(2001) whereby these companies have branch(s) or subsidiary(s) overseas or joint venture in withoverseas partners.Also, these companies are exposed to several risks, among which include strategic risks, operationalrisks, credit risks and market risks. Importantly, these companies are more likely to respond to thesurvey. More importantly, these companies were carefully selected based on their good reputation andare well established including data on these companies which are easily obtainable.2.1.2. Data
4.2 Risked CapitalTypes of Financial Risk EWRM is a value-added and risk-assessment method for understanding and mitigating many of the factors that contribute to equity-dividend ratio-negative income-loss ratio and shareholding ratio. It is based on a combination of data and financial statements from a variety of sectors at the industry’s various levels of operations. For instance, financials from enterprises of varying sizes, to financials from businesses/countries on a particular level of size and industry/council size, various information sources, different financial documents and various investment grade/asset valuation methods, are included, which can be identified and used to better understand how the companies may have the potential to respond, both to their capital needs and their capital needs based on their risk. These data and financials are then integrated into a comprehensive analysis. For instance, EWRM shows the effect of various financial factors and assets, such as market- and market-based investment risks, on equity/income ratio, ratio, capital needs, ratio of business unit to shareholder, equity investment, income/loss ratio, growth or exchange ratio of government, industry, government sector, industry/council size, stockholder value, capital needs of companies engaged to the point of liquidity conversion from government to corporate and also on shareholder
, and so forth. The overall results of EWRM in conjunction with the data from various financial entities are summarized in Table 3-3. ESRF is the annual risk analysis or risk-assessment factor and, therefore, typically includes a period for each year in which a company seeks credit for at least one of its investment. In 2010, for example, in the United States, ESRF accounted for $11.3 billion of its annual risk as of November 1, 2010. Since the recession and the subsequent economic downturn, ESRF’s annual exposure has increased greatly, reaching a maximum of $16.2 billion in 2010. Although some data on ESRF may not fully reflect the impact of the recession, including those released with the financial statements, such as the US Treasury and NPS, the amount of adverse information included in the financial statement is, for the most part, not subject to change. Because of the need to collect such information in response to a variety of circumstances, the number and duration of such changes and changes are not clearly reflected in the ESRF financial statements. To date, only a small portion of the ESRF financial statements that are not publicly available, such as the financial statement for 2010 or the 2010 NPS/NATIONAL FINANCIAL REPORT for U.S. public banks are available due to their subject matter only. For reasons of the general availability of the information, few ESRF financial statements are available for the 2010 Financial Report, which comprises of approximately 2,000 comprehensive financial notes. The fiscal year 2010 financial statement in the U.S. Financial Post is included in this file on a per-share basis. ESRF also collects financial information on a per-share basis. This reporting includes any year of financial information that is distributed to the financial institutions and their staff in the United States of America from time to time in response to specific government requests: In the United States of America, the U.S. Department of Energy is authorized to collect financial information on, and have access to, our customers’ accounts and information related to, financial market transactions (for purposes of issuing permits to finance securities in the United States, among other things, to fund research and development, to provide strategic research into the markets for the securities, and to report on such financial information; and the Government Accountability Office at any time other than on a quarterly basis; or as required by law; or as required by the applicable law. However, no information in the ESRF financial statement may be included for a specific year other than through the year 2002 ESRF report that is released solely to the US public banks. Consequently, the financial information contained in the year 2002 US financial disclosure may not be identified for the years 1999, 2003 and 2006. As stated in the report filed with the US Securities and Exchange Commission (SEC), the most common ESRF financial information was used for fiscal years 2004 through 2008; however, information on these reports was included in this file on a per-share basis. In addition, information contained in the 2005 Financial Report is not included in this file because at no time in the financial reporting periods in which current disclosures may be available, it was not available for the year 2005. (3) For each fiscal year, there are available materials not available to the public for the purpose of calculating and assessing the ESUF risk. Generally, information on securities in the United States of America does not change at any time but was updated by the agencies of the government during the time.
[Pub. L. No. 108-201, 110 Stat. 602 (Aug. 15, 2004)] Sec. 8. No ESRF financial statement may be included in a financial statement unless the ESRF Financial Statement of the Small Business Administration (SBIA) meets all of the following conditions: (1) It is not more than 10,000 pages long and is not accompanied by or otherwise substantially similar to the statement by the Secretary of State, in part or in full but does not contain the text of the statement by the Secretary of Health and Human Services or a representative from any other public official, or (2) It has not been distributed to any nonpublic information service or agency that may be reasonably believed to be a state agency, independent of which the Secretary of State, in the individual form contained in the statement, may not have a legal control over such information. It contains all of the data, the information for which the Secretary of State, in the individual form of the Secretary of the Treasury, is authorized to give as necessary, and, as necessary, it should not contain data or other information for which the Secretary of Defense is authorized to give, except as may be required in cases of international terrorism or other international health and safety matters.