THE RELATIONSHIP BETWEEN RISK MANAGEMENT AND FIRM PERFORMANCE - EVIDENCE FROM THE GEORGIAN MANUFACTURING INDUSTRY
This paper investigates the existence of the relationship between risk management (RM) and the financial performance of Georgian manufacturing firms. By looking into risk management information disclosures of manufacturing companies in Georgia for the year 2021, seven factors were studied to...
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| Main Authors: | , |
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| Format: | Article |
| Language: | English |
| Published: |
“Victor Slăvescu” Centre for Financial and Monetary Research
2025-03-01
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| Series: | Financial Studies |
| Subjects: | |
| Online Access: | https://www.icfm.ro/fs.icfm.ro/Paper02.FS1.2025.pdf |
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| Summary: | This paper investigates the existence of the relationship
between risk management (RM) and the financial performance of
Georgian manufacturing firms. By looking into risk management
information disclosures of manufacturing companies in Georgia for the
year 2021, seven factors were studied to assess the RM level they
used. RM factors were chosen based on the Enterprise Risk
Management (ERM) requirements of two leading risk management
standards: ISO 31000:2018 and COSO (2017). The Risk Management
Disclosure score (RMD) was designed and calculated. The study
analysed performance measures of a firm represented by: Operating
Profit Margin, Non-operating Profit Margin, Net Profit Margin, ROA and
ROE. OLS regression was used to reveal the relationship between
RMD and performance. The results show a positive linkage between
RMD and Operating and Net Profit Margins. On the other hand, no
linkage is found between RMD and other measures. The study
highlights how effective risk management enhances firm performance,
aiding managers and policymakers. From the theoretical aspect, the
study contributes to the literature by reinforcing the link between risk
management and firm performance and offering an updated framework
for further empirical research using RMD. |
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| ISSN: | 2066-6071 |