Current Practices of Enterprise Risk Management in Dubai

By Rao, Ananth; Marie, Attiea | Management Accounting Quarterly, Spring 2007 | Go to article overview

Current Practices of Enterprise Risk Management in Dubai


Rao, Ananth, Marie, Attiea, Management Accounting Quarterly


A SURVEY OF MANAGERS AND EXECUTIVES FROM MORE THAN 100 BUSINESSES IN DUBAI, UAE, ASSESSES THE CURRENT STATE OF RISK MANAGEMENT IN DUBAI AND OUTLINES AN ERM STRATEGY COMPANIES CAN EMPLOY TO BETTER MANAGE THEIR RISK.

EXECUTIVE SUMMARY Every organization is in the business of risk management whether it knows it or not. There is a growing demand for businesses to find ways and means to minimize risk, but many lack the knowledge of how to systematically manage the various types of business risks. In this article, based on a paper presented at the Institute of Management Accountants' International Conference in Dubai, UAE, on May 10, 2006, the authors evaluate the current status of enterprise risk management (ERM) in business organizations in Dubai and suggest some guidelines to help the businesses alleviate business risks.

Uncertainty abounds in today's economy. Every organization is in the business of risk management to some extent. It is impossible to "create a business that doesn't take risks."1 Thomas Stewart aptly summarizes the implication of risk in business: "Risk-let's get this straight upfront-is good. The point of risk management isn't to eliminate it; that would eliminate reward. The point is to manage it-that is, to choose where to place bets, where to hedge bets, and where to avoid betting altogether."2

Historically, risk management in even the most successful business tended to occur in silos-the insurance risk, the technological risk, the financial risk, the operational risk, the environmental risk-all managed independently in separate compartments or departments. Coordination of risk management was usually nonexistent, and the identification of new risks was sluggish.3 As a business continually changes, so do the risks. In today's business environment, stakeholders increasingly want companies to identify and manage their business risks.

The mismanagement of risk can carry an enormous price. The business community has witnessed a number of risk debacles in recent years that resulted in considerable financial loss, decreased shareholder value, damaged company reputations, the dismissal of senior management, and, in some cases, the destruction of the business. Consider the impact of companies selling defective products or unnecessary services, coupled in some cases with severe mishandling of the product recall or service problem; environmental disasters and inadequate attention to the resulting crisis; rogue traders lacking oversight and inadequate controls assuming enormous risks; organizations trading in complex derivative instruments without understanding the risks involved; mergers destroying shareholder value; insurance salespeople churning customers' accounts; sexual harassment of employees; and racial slurs by management and discrimination against employees.

This risk environment, in which a debacle can have major and far-reaching consequences, requires that senior management adopt enterprise risk management (ERM). The value of ERM is that it makes managers and employees at all levels sensitive to and concerned about risk management. Table 1 identifies three key aspects of ERM that are distinct from traditional risk management.

ERM is also referred to as integrated, strategic business-wide risk management. Here we use these risk terms interchangeably. In general, the term "risk" includes any event or action that will adversely affect an organization's ability to achieve its business objectives and execute its strategies successfully. The scope of risk covers all events, internal and external, that may prevent an organization from achieving its objectives. Adding the word "management" to integrated, business, or enterprise-wide risk implies a "structured and disciplined approach" that "aligns strategy, processes, people, technology, and knowledge with the purpose of evaluating and managing uncertainties that the enterprise faces as it creates value."4

STUDY OBJECTIVES

The business climate in the United Arab Emirates (UAE) in general-and Dubai in particular-is similar to that in other countries globally. …

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Current Practices of Enterprise Risk Management in Dubai
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.