Research from HSE University Provides New Study Findings on Risk Management (Development of Risk Management Mechanism and the System of Risk Metrics to Evaluate and Enhance the Long-Term Orientation of the Strategies of Non-Financial Companies): Insurance – Risk Management

2022 OCT 07 (NewsRx) -- By a News Reporter-Staff News Editor at Insurance Daily News -- Investigators publish new report on risk management. According to news reporting out of Moscow, Russia, by NewsRx editors, research stated, “Companies that are performing innovation-focused strategies or experiencing digital transformation are exposed to significant long-term risks. The untimely and inefficient management of these risks leads to the destruction of the company’s value and calls into question its survival.”

Financial supporters for this research include Ministry of Science And Higher Education of The Russian Federation.

Our news journalists obtained a quote from the research from HSE University: “This is often underpinned by companies following strategic management with a short-term horizon. Such ‘strategic myopia’ prevents timely identification and treatment of strategic risks and destroys value due to physical and intellectual capital investment restrictions. However, the existing mechanisms of setting up risk management architecture neither addresses the lengths of the horizon and the alignment of the horizon with the strategic objectives, state of the environment and stakeholder expectations nor provides the tools for evaluating the horizon of the firm’s strategy. Moreover, existing systems of evaluating short-termism rely only on financial and governance metrics and do not address environmental and social factors. We closed these gaps and developed a strategic risk-controlling mechanisms to set up the risk management architecture that expanded ‘conventional’ risk management analysis and addressed the ‘strategic myopia’. We also worked out the critical tool of the mechanism-the system of key risk metrics (SKRI) aimed at assessing the degree of a company’s following of long-term strategic orientation. Finally, we tested it on a sample of Russian non-financial companies.”

According to the news reporters, the research concluded: “Testing results revealed a strong and positive correlation between the management’s decision to follow a long-term strategic focus and the growth of companies’ long-term value (measured by economic value added (EVA)). SKRI can be utilized in strategic risk controlling to assess the company’s propensity to follow a short-term horizon, evaluate its ability to maintain sustainable value creation, and develop recommendations to stakeholders to expand its strategic focus.”

For more information on this research see: Development of Risk Management Mechanism and the System of Risk Metrics to Evaluate and Enhance the Long-Term Orientation of the Strategies of Non-Financial Companies. Risks, 2022,10(182):182. (Risks - http://www.mdpi.com/journal/risks). The publisher for Risks is MDPI AG.

A free version of this journal article is available at https://doi.org/10.3390/risks10090182.

Our news editors report that additional information may be obtained by contacting Sergey Grishunin, School of Finance, HSE University, 101000 Moscow, Russia. Additional authors for this research include Svetlana Suloeva, Ekaterina Burova.

(Our reports deliver fact-based news of research and discoveries from around the world.)