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Risk management: perspectives and open issues
L. :
McGraw-Hill Education, 2016.
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 inluence
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, quantiication, simpliication
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.
