Risk Management, An Essential Element Of Excellent Corporate Governance
( Abdul Rasid, Golshan, Ismail & Ahmad, 2012) defined risk management, it involves managing to achieve a proper balance between realizing opportunities for gains while minimizing losses. As this definition implies, risk management is an integral part of a good management practice and an essential element of excellent corporate governance. Risk management is a repetitive process that constitutes steps that when performed; it facilitates improved decision-making and performance. These steps include identifying, analyzing, evaluating, treating, monitoring and communicating risks. This process enables organizations to maximize the gains and minimize the losses (COSO, 2004). According to (Pagach & Warr, 2011), the primary goal of risk management is to maximize shareholder’s equity. Traditionally, when one talked about risk management, what came to mind was rather insurance, broker or auditor. The concern was on the negative impacts of risk exposures, and the risk specialist job was only to diminish this negative impact to its least level. However, in recent years the concept of ERM has emerged. In ERM, the focus is on both positive and negative sides of risk (Epetimehin, 2013) .
ERM is sometimes referred to as “business risk management”, “strategic risk management”, “holistic risk management”, “integrated risk management”, “corporate risk management”, and “enterprise wide risk management”, which is the new substitute of traditional silo-based…