The Impact of Enterprise Risk Management on Performance of Non-State Higher Educational Institutions in Sri Lanka
Abstract
Enterprise risk management is a modern, strategic tool that mitigates the overall risks of organizations. The theoretical literature review revealed the standards and frameworks recommended by international risk management organizations, which provide guidelines for risk assessment and mitigation. The empirical literature review revealed that studies conducted to examine the relationship between the implementation of ERM and firm performance concluded with contradictory conclusions. This study explores the relationships between organizational ERM philosophy, organizational governance structure, implementation of ERM, and the organizational performance of non-state higher educational institutions in Sri Lanka. A sample of 155 senior and above-level persons involved in strategic decision-making was used to collect primary data. This study proves the existence of a statistically significant relationship between the organizational ERM philosophy and the implementation of ERM. Further, this study proves the existence of a statistically significant relationship between the organizational governance structure and the implementation of ERM. This study further proves that there is no statistically significant relationship between the implementation of ERM and the firm performance with aligning to the findings from past studies in various other contexts. This study shows that 8% of the performance of the higher educational institutions is explained by the factors of organizational ERM philosophy, organizational governance structure, and implementation of ERM. This study shows that employee involvement does not significantly affect the relationship between implementation of ERM and firm performance. Overall, the findings of this study expand the empirical literature on the higher education sector related to institutional risk management, provide risk management frameworks and standards for strategy formulators.
Keywords: organizational culture, employee involvement, organizational governance structure, organizational enterprise risk management philosophy, tone from the top.
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