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Regular version of the site

Book

Risk management: perspectives and open issues

Cantino V., De Vincentiis P., Racca G.
Globalization and the resulting high level of uncertainties in managing business activities have exposed organizations to new and complex risks which need to be researched and managed. Innovative and holistic social, economic, political and legal perspectives are required to understand and manage both internal and external risks. Globalization focuses strongly on convergence and standardization of systems, policies and practices. I examine risk measurement and management from an international accounting perspective and discuss politics and ethical aspects of global convergence of accounting standards. Risk management theories and practices for corporations are largely based on “trusting” that 􀏔inancial statements and annual reports prepared using International Financial Reporting Standards (IFRS) which are issued by the International Accounting Standards Board (IASB), are comparable, reliable, relevant and therefore can be “trusted”. My presentation will ask participants to question such simplistic assumptions by the global standard setters. IASB uses the term “substance over form” to describe the importance of professional judgments in accounting. However, the global standard setters provide no discussion or guidance on various factors and contexts that may in􀏔luence managers’ judgments and decision making both within and across countries. On the contrary, they have assumed that managers’ judgments and decisions in various countries are largely consistent, neutral and value-free. I suggest that globalization and convergence are embedded in complex social and political processes that require researchers and practitioners to critically examine contextual environments of countries rather than simply focus on measurement, quanti􀏔ication, simpli􀏔ication and categorization. We need theoretical and methodological perspectives that provide insight into the “minds” of managers and other stakeholders. More holistic judgment and decision making research based on quantitative, qualitative, and both formal and informal sources, will lead to better models and practices to improve business performance and create value. Given the pressure on us to publish in leading international journals and requests by my Italian colleagues, I provide some theoretical and methodological suggestions to improve research. In conclusion, we need risk management theories and practices that move away from narrowly focused capital market approaches and use multi-disciplinary and multi-perspective approaches to explain, predict and provide empirical evidence on this complex and contextualized global environment.
Chapters
Risk management: perspectives and open issues