Enterprise Risk Management and non-financial risks disclosure: The value of an integrated approach in communicating with stakeholders

Abstract

The following thesis aims at examining in depth the relationship existing between enterprise risk management and non-financial disclosure. Specifically, the first chapter focuses on a brief presentation of what is risk and how it can be classified, followed by a historical description of risk management, from the first silos approach to the always more integrated processes, expressing the need for business activities to pursue a more complete and exhaustive approach, which exploits opportunities deriving from risks and allows to manage them in a more integrated way. Successively the attention moves towards the theoretical description of ERM and its main peculiarities with a focus on the international framework provided by the Committee of Sponsoring Organizations of the Treadway Commission, with the objective of providing an effective framework for the implementation of ERM systems inside the organisation. The third chapter focuses more on the topic of non-financial risks, highlighting the effects on the financial performance of a company and the reason according to which this category of risks should be integrated with the management systems of all the other risks. Thereafter the composition analyses the topic of non-financial disclosure, remarking the importance of the transition from an “only financial” view to a more integrated approach to disclosure, which considers the interests of all stakeholders and, as a consequence, all the risks and aspects connected to non-financial issues. Finally, in order to investigate whether companies with more sophisticated ERM systems and adopting a more integrated approach actually disclose to their stakeholders a greater level of information concerning their non-financial risks, the thesis through different case studies relates the level of ERM processes and the level of non-financial risk disclosure in a sample of Italian listed companies.