Risk may be described as the probability or possibility for negative consequences, such as damage, injury, loss, or any unfavorable occurrence arising from vulnerabilities, whether they originate within or outside. These dangers may be alleviated by preemptive steps implemented beforehand. Enterprise Risk Management (ERM) employs a comprehensive technique to effectively identify and assess risks. The primary objective of this approach is to support decision-making processes and improve the probability of successfully attaining strategic and analytical objectives. ERM has been widely endorsed by several assessors, regulators, and experts as a very beneficial strategy for enterprises. This article provides an analysis of the corporate and legislative governance structures that regulate Enterprise Risk Management in municipalities in South Africa. This study provides a scholarly investigation into the historical progression of ERM in the public sector, presenting a thorough examination of its adoption and execution within the governmental context of South Africa. In addition, this statement outlines the regulatory obligations and fundamental principles of effective corporate governance that regulate the arrangement, responsibilities, and obligations related to ERM. The report highlights the need of continuous feedback and improvement in risk management approaches.
Keywords
Enterprise Risk Management, Corporate Governance, Risk Management Approaches, Internal Business Environment, King Risk Management Criteria.
P. Greenbank, “Objective setting in the micro‐business,” International Journal of Entrepreneurial Behavior & Research, vol. 7, no. 3, pp. 108–127, Jun. 2001, doi: 10.1108/eum0000000005531.
S. A. Torabi, R. Giahi, and N. Sahebjamnia, “An enhanced risk assessment framework for business continuity management systems,” Safety Science, vol. 89, pp. 201–218, Nov. 2016, doi: 10.1016/j.ssci.2016.06.015.
B. Bui and C. de Villiers, “Business strategies and management accounting in response to climate change risk exposure and regulatory uncertainty,” The British Accounting Review, vol. 49, no. 1, pp. 4–24, Jan. 2017, doi: 10.1016/j.bar.2016.10.006.
L. Chen and S. Mohamed, “Impact of the internal business environment on knowledge management within construction organisations,” Construction Innovation, vol. 8, no. 1, pp. 61–81, Jan. 2008, doi: 10.1108/14714170810846521.
E. O’Donnell, “Enterprise risk management: A systems-thinking framework for the event identification phase,” International Journal of Accounting Information Systems, vol. 6, no. 3, pp. 177–195, Sep. 2005, doi: 10.1016/j.accinf.2005.05.002.
S. L. Mueller and A. S. Thomas, “Culture and entrepreneurial potential,” Journal of Business Venturing, vol. 16, no. 1, pp. 51–75, Jan. 2001, doi: 10.1016/s0883-9026(99)00039-7.
T. Keil et al., “Information and communication technology driven business transformation — a call for research,” Computers in Industry, vol. 44, no. 3, pp. 263–282, Apr. 2001, doi: 10.1016/s0166-3615(01)00074-4.
M. Alles, G. Brennan, A. Kogan, and M. A. Vasarhelyi, “Continuous monitoring of business process controls: A pilot implementation of a continuous auditing system at Siemens,” International Journal of Accounting Information Systems, vol. 7, no. 2, pp. 137–161, Jun. 2006, doi: 10.1016/j.accinf.2005.10.004.
S. Sarferaz, Compendium on Enterprise Resource Planning. Springer International Publishing, 2022. doi: 10.1007/978-3-030-93856-7.
F. Pissarides, “Is lack of funds the main obstacle to growth? ebrd’s experience with small- and medium-sized businesses in central and eastern europe,” Journal of Business Venturing, vol. 14, no. 5–6, pp. 519–539, Sep. 1999, doi: 10.1016/s0883-9026(98)00027-5.
X. Huang, “Portfolio selection with a new definition of risk,” European Journal of Operational Research, vol. 186, no. 1, pp. 351–357, Apr. 2008, doi: 10.1016/j.ejor.2007.01.045.
Å. Boholm, “The cultural nature of risk: Can there be an anthropology of uncertainty?,” Ethnos, vol. 68, no. 2, pp. 159–178, Jan. 2003, doi: 10.1080/0014184032000097722.
U. Ojiako, “Examining thematic elements in strategic business risk,” Management Research Review, vol. 35, no. 2, pp. 90–105, Jan. 2012, doi: 10.1108/01409171211195134.
S. Kumar, A. Kwong, and C. Misra, “Risk mitigation in offshoring of business operations,” Journal of Manufacturing Technology Management, vol. 20, no. 4, pp. 442–459, May 2009, doi: 10.1108/17410380910953711.
D. R. Towill, “The impact of business policy on bullwhip induced risk in supply chain management,” International Journal of Physical Distribution & Logistics Management, vol. 35, no. 8, pp. 555–575, Sep. 2005, doi: 10.1108/09600030510623339.
Y. H. Chun and K. Tang, “Determining the optimal warranty price based on the producer’s and customers’ risk preferences,” European Journal of Operational Research, vol. 85, no. 1, pp. 97–110, Aug. 1995, doi: 10.1016/0377-2217(93)e0163-r.
Y.-S. Chan, S. I. Greenbaum, and A. V. Thakor, “Information reusability, competition and bank asset quality,” Journal of Banking & Finance, vol. 10, no. 2, pp. 243–253, Jun. 1986, doi: 10.1016/0378-4266(86)90008-7.
A. Jalal‐Karim, “Leveraging enterprise risk management (ERM) for boosting competitive business advantages in Bahrain,” World Journal of Entrepreneurship, Management and Sustainable Development, vol. 9, no. 1, pp. 65–75, Mar. 2013, doi: 10.1108/20425961311315728.
F. Fiordelisi, M.-G. Soana, and P. Schwizer, “The determinants of reputational risk in the banking sector,” Journal of Banking & Finance, vol. 37, no. 5, pp. 1359–1371, May 2013, doi: 10.1016/j.jbankfin.2012.04.021.
S. A. Zahra, “Predictors and financial outcomes of corporate entrepreneurship: An exploratory study,” Journal of Business Venturing, vol. 6, no. 4, pp. 259–285, Jul. 1991, doi: 10.1016/0883-9026(91)90019-a.
A. B. Atkinson and J. E. Stiglitz, “The design of tax structure: Direct versus indirect taxation,” Journal of Public Economics, vol. 6, no. 1–2, pp. 55–75, Jul. 1976, doi: 10.1016/0047-2727(76)90041-4.
R. Leisen, B. Steffen, and C. Weber, “Regulatory risk and the resilience of new sustainable business models in the energy sector,” Journal of Cleaner Production, vol. 219, pp. 865–878, May 2019, doi: 10.1016/j.jclepro.2019.01.330.
Z. Virglerova, F. Conte, J. Amoah, and M. R. Massaro, “THE PERCEPTION OF LEGAL RISK AND ITS IMPACT ON THE BUSINESS OF SMES,” International Journal of Entrepreneurial Knowledge, vol. 8, no. 2, pp. 1–13, Dec. 2020, doi: 10.37335/ijek.v8i2.115.
M. Al-Mashari, A. Al-Mudimigh, and M. Zairi, “Enterprise resource planning: A taxonomy of critical factors,” European Journal of Operational Research, vol. 146, no. 2, pp. 352–364, Apr. 2003, doi: 10.1016/s0377-2217(02)00554-4.
“Structure and functions of the South African Government | South African Government.” https://www.gov.za/about-government/government-system/structure-and-functions-south-african-government
L. Goretzki, E. Strauss, and J. Weber, “An institutional perspective on the changes in management accountants’ professional role,” Management Accounting Research, vol. 24, no. 1, pp. 41–63, Mar. 2013, doi: 10.1016/j.mar.2012.11.002.
J. Rasmussen, “Risk management in a dynamic society: a modelling problem,” Safety Science, vol. 27, no. 2–3, pp. 183–213, Nov. 1997, doi: 10.1016/s0925-7535(97)00052-0.
S. Writer, “SABS publishes new South African National Standards in June 2020,” B2B Central, Jul. 22, 2020. https://www.b2bcentral.co.za/sabs-publishes-new-south-african-national-standards-in-june-2020/#:~:text=The%20South%20African%20Bureau%20of%20Standards%20%28SABS%29%20is,mandated%20by%20the%20Standards%20Act%20No.8%20of%202008.
D. Thal, “Language development in children at risk for language impairment: Cross-population comparisons,” Brain and Language, vol. 88, no. 2, pp. 167–179, Feb. 2004, doi: 10.1016/s0093-934x(03)00096-8.
N. Attig, S. El Ghoul, O. Guedhami, and J. Suh, “Corporate Social Responsibility and Credit Ratings,” Journal of Business Ethics, vol. 117, no. 4, pp. 679–694, May 2013, doi: 10.1007/s10551-013-1714-2.
I. O. Directors, “King Report on Governance for South Africa 2009: King Code of Governance Principles for South Africa 2009 ; Companies Act 71 of 2008”, Juta and Company Ltd, 2010.
S. Africa, Local Government: Municipal Systems Act, No. 32 of 2000 and regulations. 2014.
CRediT Author Statement
The author reviewed the results and approved the final version of the manuscript.
Acknowledgements
We would like to thank Reviewers for taking the time and effort necessary to review the manuscript. We sincerely appreciate all valuable comments and suggestions, which helped us to improve the quality of the manuscript.
Funding
No funding was received to assist with the preparation of this manuscript.
Ethics declarations
Conflict of interest
The authors have no conflicts of interest to declare that are relevant to the content of this article.
Availability of data and materials
No data available for above study.
Author information
Contributions
All authors have equal contribution in the paper and all authors have read and agreed to the published version of the manuscript.
Corresponding author
Paulina Mbunye
Walter Sisulu University, Nelson Mandela drive, Eastern Cape, Mthatha 5117, South Africa.
Open Access This article is licensed under a Creative Commons Attribution NoDerivs is a more restrictive license. It allows you to redistribute the material commercially or non-commercially but the user cannot make any changes whatsoever to the original, i.e. no derivatives of the original work. To view a copy of this license, visit https://creativecommons.org/licenses/by-nc-nd/4.0/
Cite this article
Paulina Mbunye, “Enterprise Risk Management in South African Municipalities within Legislative and Corporate Governance Frameworks”, Journal of Enterprise and Business Intelligence, vol.5, no.1, pp. 010-018, January 2025. doi: 10.53759/5181/JEBI202505002.
