Why firms implement risk governance – Stepping beyond traditional risk management to enterprise risk management

ERM can include varying levels of very traditional risk management activities and risk governance, and taking this division into account is an important step in clarifying theoretical motives for ERM implementation. By doing so, this study is able to investigate determinants of the additional risk governance component of ERM – the step beyond traditional risk management. Evidence does not seem to suggest that public pressure, from Big Four auditing firms and credit rating agencies, is motivating risk governance implementation. This may be evidence that risk governance and ERM implementation are not simply about firms’ attempts to window-dress and appease stakeholders artificially.