Enterprise Risk Management and Performance of Financial Institutions in Iraq: The Mediating Effect of Information Technology Quality

Document Type: Special Issue

Authors

1 Assistant Prof., Tikrit university, Iraq.

2 Tikrit university, Iraq.

3 Ph.D., Al-Imam University College, Iraq.

Abstract

Enterprise risk management represents a process of assessing exposure to risks in an institution. It is a systematic mechanism and a comprehensive tool for predicting events, including unexpected events, and their impacts. This paper is a conceptual study. It aims at designing a model for testing the mediation effect of information technology (IT) quality on the relationship between the enterprise risk management (henceforth, ERM) practice and the financial performance of financial institutions in Iraq. Based on reviewing the literature on ERM, it is found that ERM (leadership roles, risk culture and compliance) has a positive and important effect on the financial performance of financial institution in Iraq. In addition, this paper shows that the IT quality is a good medium for increasing the interaction between practices of ERM and financial performance positively. It provides a practical and theoretical contribution to practices of ERM in listed companies in Iraq. It also has major implications for professional practitioners, regulators and academics in Iraq. Finally, this paper contributes to building relevant knowledge in the field of leadership role, risk culture, compliance and IT quality.

Keywords


Abu Hussain, H., & Al-Ajmi, J. (2012). Risk management practices of conventional and Islamic banks in Bahrain. The Journal of Risk Finance13(3), 215-239.

Acharyya, M., & Johnson, J. E. V. (2013). Investigating the development of enterprise risk management in the insurance industry: an empirical study on four major European insurers. The Geneva Papers on Risk and Insurance: Issues and Practice, 55-80.

Altarawneh, M. H., & Shafie, R. (2018). Risks and Bank Performance in Jordan. Academy of Accounting and Financial Studies Journal22(6), 1-15.

Berenbeim, R. (2004). The value-based enterprise: A new corporate citizenship paradigm. Paper presented at The Asia Foundation’s Hong Kong Symposium on Corporate Citizenship and the Taipei Corporate Citizenship Forum, held in Hong Kong, October pp. 27-29, 2004.

Bowling, D. M., & Rieger, L. (2005). Success factors for implementing enterprise risk management: building on the COSO framework for enterprise risk management to reduce overall risk. Bank Accounting & Finance18(3), 21-27.

Committee of Sponsoring Organization (COSO), (2004). Enterprise Risk Management-Integrated Framework. COSO, New York.

Debowski, B. (2006), The leadership and management conundrum, innovation or risk management,” Leadership & Organization Development Journal, 28 (2): 122-136.

Eick, C.L.M. (2003). Factors that promote effective risk management at universities classified by the Carnegie system. Auburn University, Alabama.

Fasilat, S. (2015). The critical success factors for an information system (IS) risk management implementation in the Nigerian banking sector (Doctoral dissertation, Universiti Utara Malaysia).

Fraser, Ian (2007), Embedding risk management; structures and approaches, Managerial Auditing Journal, 22, (4): 392-409.

Grody, A. D., Hughes, P. J., & Toms, S. (2010). Risk accounting–a next-generation risk management system for financial institutions. Journal of Financial Transformation, 29(1), 43-56

Gupta,.P..K. (2011). Risk Management in Indian companies: EWRM concerns and issues, The Journal of Risk Finance, 12 (2):121-139.

Hoyt, R.E., & Liebenberg, A.P. (2006). The Value of Enterprise Risk Management: Evidence from the U.S. Insurance industry, pp. 1-22.

 Khalaf, O. I., & Sabbar, B. M. (2019). An overview on wireless sensor networks and finding optimal location of nodes. Periodicals of Engineering and Natural Sciences7(3), 1096-1101

Kleffner, A.E., Lee, R.B., & Mc Gannon, B.(2003b). Stronger corporate governance and its implications on risk management, Ivey Business Journal, 67(5): 4.

Lima, M, and Cstro, P. (2005),” Cultural theory meets the community: worldviews and local issues,” Journal of Environmental Psychology, 25 (1): 23- 35

Longenecker, D. & Neubert, M.A. ( 2003), “A framework for integrated risk management in international business,” Journal of International Business Studies, 12.(2): 153-163

Mahmoud, N., & Ahmed, E. M. (2014). Factors Affecting Risk Management Practices and Financial Performance of Iraqi Private Banks. Middle-East Journal of Scientific Research22(7), 971-977.

Mikes, A. (2005). Enterprise Risk Management in Action. Discussion paper, The Center for Analysis of Risk and Regulation at London School of Economics and Political Science 1(3): 259-358

Muteti, S. R. (2014). Relationship between financial risk management and financial performance of commercial banks in Kenya. Kenya: A Research Project, College of Humanities and Social Sciences.

Nadine, G. & Joan, S. (2016), “Supporting strategic success through enterprise-wide reputation risk management”, The Journal of Risk Finance, 17 (1): 26-45.

Nocco, B. W. & Stulz, R. M. (2006) Enterprise Risk Management: Theory and Practice, Journal of Applied Corporate Finance. 18(4): 1-8.

 Osamah Ibrahim Khalaf, Ghaida Muttashar Abdulsahib and Muayed Sadik, 2018. A Modified Algorithm for Improving Lifetime WSN. Journal of Engineering and Applied Sciences, 13: 9277-9282.

Pagach, D., & Warr, R.(2007). An Empirical Investigation of the Characteristics of Firms Adopting Enterprise Risk Management

Price Waterhouse Coopers. (2004). Integrity-driven performance: A new strategy for success through integrated governance, risk and compliance management.

Priscilla. B., & Susan. H (2008), Ten Step to Enterprise –Wide Risk Management, Corporate Governance Journal, 9 (5), 539-550.

Shafiq, A., & Nasr, M. (2010). Risk management practices followed by the commercial banks in Pakistan. International Review of Business Research Papers6(2), 308-325.

Subramaniam, N., Lisa, M. & Zhang, J. (2009), Corporate Governance, firm characteristics and risk management committee formation in Australia companies, Managerial Auditing Journal, Vol. 24 (4), pp. 316-339

Yazid A. S., Hussin, M.R., & Wan, D (2011). An Examination of Enterprise Risk Management (ERM) Practices among the Government Linked Companies (GLCs) in Malaysia, International Business Research Journal, 4 (4), 94-103.

Yazid, A. S., Hussin, M. R., & Razali, A. R. (2009). An empirical study of risk management best practices in public limited companies in Malaysia. The Journal of Risk Management and Insurance, (13), 1-22.

Yusuwan, N. Adnan, H., & Omar, A. (2008). Client’s Perspective of Risk Management Practice in Malaysian Construction Industry, Journal of Politics and Law, 1(3), 121-130.

Zaleha Abdul Rashid, S., Ruhana Isa, C., & Khairuzzaman Wan Ismail, W. (2014). Management accounting systems, enterprise risk management and organizational performance in financial institutions. Asian Review of Accounting, 22(2), 128-144.