Enterprise Risk Management: Theory and Practice
Brian W. Nocco
René M. Stulz
Ohio State University (OSU) - Department of Finance; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI)
In this paper, we explain how enterprise risk management creates value for shareholders. In contrast to the existing finance literature, we emphasize the organizational benefits of risk management. We show how a firm should choose its risk appetite and measure risk when implementing enterprise risk management. We also provide an extensive guide to the implementation issues faced by firms that implement enterprise risk management.
Number of Pages in PDF File: 33
JEL Classification: G20, G21, G22, G30, G32, G34
Date posted: August 4, 2006