Modified of ERM Index for Southeast Asia

Abstract

AbstractThis study, conducted between 2016–2021 on Southeast Asian mining companies, introduces the Modified Enterprise Risk Management (ERM) Index (MERMi) to measure the implementation of ERM based on the COSO 2017 principles. The study found that ERM implementation is influenced by industry competition, company complexity, international diversification, and financial leverage. Meanwhile, company size and complexity, along with ERM and industry competition, positively impact firm performance. However, international diversification and financial leverage do not have a significant effect on firm performance. The study also concludes that there are no significant differences between the factors influencing ERM implementation in Southeast Asia and in advanced ERM implementation countries such as the USA, Europe, and Germany. The findings emphasize the importance of integrating risk management into the corporate governance of the mining sector in Southeast Asia. The limitations of this research include the lack of precise company disclosures on ERM implementation, which could be addressed through more research in other sectors and by using ISO 31,000 as a replacement for measuring instruments.

Keywords

• COSO 2017
• enterprise risk management
• firm performance
• Modified Risk Management Index (MERMi)
• G30
• G31