Exploring Enterprise Risk Management Adoption Frameworks in US and European Multinational Corporations
Keywords:
Enterprise Risk Management (ERM), Multinational Corporations, US, EuropeAbstract
This article examines the adoption practices of Enterprise Risk Management (ERM) within US and European multinational corporations. It synthesizes academic literature and regulatory guidelines to identify the key drivers, benefits, challenges, and regional nuances influencing ERM implementation. Findings indicate that US adoption has historically been driven by financial regulations like Sarbanes-Oxley, emphasizing internal controls and financial risk management. Conversely, European adoption is increasingly integrating Environmental, Social, and Governance (ESG) risks, propelled by directives such as the Corporate Sustainability Reporting Directive (CSRD). While ERM demonstrably enhances firm value and performance by optimizing capital allocation and reducing earnings volatility, challenges persist in achieving full integration and moving beyond mere compliance. The discussion highlights the strategic imperative of ERM in a complex global landscape, emphasizing the need for agile and deeply embedded risk management practices, and considers the implications of various firm-specific and macroeconomic factors on ERM propensity and total firm risk.
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Copyright (c) 2025 Dr. Beatriz M. Ferreira, Dr. Katarina J. Novak
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