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Accounting, Organizations and Society 35 (2010) 659–675

Contents lists available at ScienceDirect

Accounting, Organizations and Society

journal homepage: www.elsevier.com/locate/aos

The organizational dynamics of Enterprise Risk Management

Marika Arena 1, Michela Arnaboldi *, Giovanni Azzone 2

Politecnico di Milano, Dipartimento di Ingegneria Gestionale, Piazza Leonardo da Vinci, 32, 20133 Milano, Italy

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This paper explores the organizational dynamics of Enterprise Risk Management (ERM). ERM is the main form taken by firms’ increasing efforts to organize uncertainty, which ‘exploded’ in the 1990s. The ERM approach seeks to link risk management with business strategy and objective-setting, entering the domains of control, accountability and decision making. In this work, the organizational variations of ERM are investigated through a longitudinal multiple case study, using data from three companies collected over a 7-year period (from 2002 to 2008). The findings contribute to our understanding of ERM as a practice, revealing its trajectory within the organizations as it encounters pre-existing logics, and as both are shaped by risk rationalities, experts and technologies. Ó 2010 Elsevier Ltd. All rights reserved.

Introduction ‘‘We now propose to introduce Enterprise Risk Management (ERM) analysis into the corporate credit ratings process globally as a forward-looking, structured framework to evaluate management as a principal component in determining the overall business profile. [. . .] ERM provides management with information to optimize earnings – and ultimately the firm’s value – while staying in a well-defined risk tolerance. [. . .] ERM also provides a new and clearer language for transferring information about management’s intentions and capabilities, which are critical to credit evaluation” (Standard and Poor’s, 2007). Interest in Enterprise Risk Management (ERM) has grown rapidly during the past 15...