Regulation of enterprise risk management: a comparative analysis of Australia, Germany and the USA

Abstract

Abstract: Enterprise risk management (ERM) has become a ubiquitous strategy, especially among international corporate governance regulations. This paper aims to examine the level of risk management regulation through an international comparison approach. Specifically, from a corporate governance perspective, we investigate the Australian risk management regulations and compare it to the regulations of the USA and Germany. We find clear differences in each country’s approach, with the USA having the highest level of regulation, followed by Australia and finally Germany. This implies that the level of regulation depends on country-specific characteristics and that the strict regulations of the SOX have led to a high level of regulation. From a management perspective, it seems to be recommendable to harmonise the respective international regulations in order to provide multinational corporations with similar requirements across different countries. Accordingly, this paper proposes multilateral collaboration in harmonizing international ERM regulations in order to avoid that firms take unnecessary risks. As a consequence, this harmonization stabilizes in turn the global financial system. Keywords: risk management regulations; corporate governance; enterprise risk management; ERM; COSO framework; international comparison; Australia; Germany; USA. Reference to this paper should be made as follows: Bledow, N., Sassen, R. and Wei, S.O.S. (2019) ‘Regulation of enterprise risk management: a comparative analysis of Australia, Germany and the USA’, Int. J. Comparative Management, Vol. 2, No. 2, pp.96–122. Biographical notes: Nicolai Bledow is finance professional with experience in investment banking, financial due-diligence and controlling. He is currently working as an Assistant to the Management of Aqseptence Group. He is a former bachelor student of the Justus Liebig University of Giessen, a former master student of the University of Hamburg and a visiting scholar of the Macquarie University in Sydney.