RISK MANAGEMENT IN THE CONTEXT OF CORPORATE GOVERNANCE: DOMESTIC EXPERIENCE
Abstract
Abstract. The purpose of this article is to assess the formal manifestations of taking into account the principles of risk management in the domestic corporate governance system. A low or satisfactory tendency of the domestic corporate sector to assimilate the rules of corporate governance abroad may also indicate in advance the lack of active risk management in domestic companies in the context of corporate governance. The survey participants' awareness of the importance of the "Risk Management" function of the supervisory board regarding the state of corporate governance in Ukraine does not automatically guarantee the implementation of this function in practice. The results of the analysis of the reporting of joint-stock companies, whose shares are included in the calculation of the PFTS index, indicate the absence and/or lack of disclosure of information regarding the relationship between risk management and corporate governance at domestic enterprises. The leading role of corporate management bodies, in particular the supervisory board, in the formation of long-term risk management policy, including and corporate. The domestic corporate sector as a whole is characterized by a satisfactory level of corporate governance, which indicates incomplete compliance with the principles of corporate governance developed by the international community. Domestic practitioners of corporate governance have formed the correct attitude in theory to the role of the supervisory board in risk management. In practice, according to the results of the assessment of joint-stock companies included in the calculation of the PFTS index, in the context of corporate risk management, insufficient attention is paid, and the reports are of a formal nature. Strengthening the relationship between corporate governance and risk management is possible provided that measures and disclosure of information are implemented in the following directions: constant monitoring of the risk management system and disclosure of information regarding risk management; identification of significant risks; determination of the risk profile of corporate bodies; remuneration for risk management in the short and long term; principles of risk management; reporting to the board.
Downloads
References
Rehman, H., Ramzan, M., Haq, M. Z. U., Hwang, J., & Kim, K.-B. (2021). Risk Management in Corporate Governance Framework. Sustainability, 13(9), 5015. doi: https://doi.org/10.3390/su13095015.
Badriyah, N., Sari, R. N., & Basri, Y. M. (2015). The Effect of Corporate Governance and Firm Characteristics on Firm Performance and Risk Management as an Intervening Variable. In Z. M. Sanusi, N. B. Zakaria, A. A. Othman & I. Musirin (Eds.), 4th International Accounting and Business Conference (IABC) (pp. 868-875). Putrajaya, Malaysia. Procedia Economics and Finance, 31. doi: https://doi.org/10.1016/S2212-5671(15)01184-3.
Van der Poll, H. M., & Mthiyane, Z. Z. F. (2018). The Interdependence of Risk Management, Corporate Governance and Management Accounting. Southern African Business Review, 22(1), 30 pages. doi: https://doi.org/10.25159/1998-8125/4344.
Darrat, A. F., Gray, S., Park, J. C., & Wu, Y. (2016). Corporate Governance and Bankruptcy Risk. Journal of Accounting, Auditing & Finance, 31(2), 163-202. doi: https://doi.org/10.1177/0148558X14560898.
Ballester, L., Gonzalez-Urteaga, A., & Martinez, B. (2020). The role of internal corporate governance mechanisms on default risk: A systematic review for different institutional settings. Research in International Business and Finance, 54, 101293. doi: https://doi.org/10.1016/j.ribaf.2020.101293.
Fernando, J.M.R., Li, L., & Hou, Y. (2020). Corporate governance and correlation in corporate defaults. Corporate governance - An international review, 28(3), 188-206. doi: https://doi.org/10.1111/corg.12306.
Li, Z. Y., Crook, J., Andreeva, G., & Tang, Y. (2021). Predicting the risk of financial distress using corporate governance measures. Southern Pacific-Basin Finance Journal, 68, 101334. doi: https://doi.org/10.1016/j.pacfin.2020.101334.
Rehman, A., & Hashim, F. (2020). Impact of Fraud Risk Assessment on Good Corporate Governance: Case of Public Listed Companies in Oman. Business systems research journal, 11(1), 546-558. doi: https://doi.org/10.2478/bsrj-2020-0002.
Gennaro, A., & Nietlispach, M. (2021). Corporate Governance and Risk Management: Lessons (Not) Learnt from the Financial Crisis. Journal of Risk and Financial Management, 14(9), 419. doi: https://doi.org/10.3390/jrfm14090419.
Pemberton, B. C., & Ng, W. (2021). Corporate governance paradigms of hazardous industries: Enduring challenges of Britain's civil nuclear industry. Journal of general management, 46(2), 156-167. doi: https://doi.org/10.1177/0306307020915103.
Novak, N. G., Orazmuradov, A., & Shavrieva, G. I. (2018). Organizational changes in corporate risk management and its effect on competitiveness of innovative and active enterprises. Economics. Finances. Law, 1(2), 24-26. (in Ukrainian)
Golub G., Sloboda L. (2017). Regulation risks of corporate governance in the banking sector of the Ukrainian economy. Socio-economic problems of the modern period of Ukraine, 2, 137-141. (in Ukrainian)
Semeniutina, T. V. (2015). Organizational Culture of Risk-Management as Integral Constituent of an Effective Risk Management System of Enterprise. Business Inform, 4, 297-302. (in Ukrainian)
Kuschik, A. P. (2017). Problem aspects of the implementation of the corporate risk management system. Bulletin of Zaporizhzhіa National University. Economic Sciences, 2, 14-19. (in Ukrainian)
Lysenko, V. (2017). Corporate strategy of risk management in agribusiness. Agricultural and Resource Economics: International Scientific E-Journal, 3(4), 97-108. Retrieved from http://nbuv.gov.ua/UJRN/areis_2017_3_4_10. (in Ukrainian)
Kirkpatrick, G. (2009). The Corporate Governance Lessons from the Financial Crisis. Paris: OECD Publication. Retrieved from https://www.oecd.org/finance/financial-markets/42229620.pdf.
Blundell-Wignall, A., Atkinson, P., & Lee, S. H. (2008). The Current Financial Crisis: Causes and Policy Issues. Financial Market Trends, OECD Publication. Retrieved from http://www.oecd.org/dataoecd/47/26/41942872.pdf.
Lang, W., & Jagtiani, J. (2010). The Mortgage and Financial Crises: The Role of Credit Risk Management and Corporate Governance. Atlantic Economic Journal, 38, 295–316.
Kumar, N., & Singh, J. P. (2013). Global Financial Crisis: Corporate Governance Failures and Lessons. Journal of Finance, Accounting and Management, 4, 21–34.
Pirson, M., & Turnbull. (2010). The Future of Corporate Governance: Network Governance: A Lesson from the Financial Crisis. Paper presented at the Annual Meeting of the Society for the Advancement of Socio-Economics, Philadelphia, PA, USA, June 24–26. Retrieved from https://www.researchgate.net/publication/228137843_The_Future_of_Corporate_Governance_Network_Governance_-_A_Lesson_from_the_Financial_Crisis.
