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Gletsu dissertation 040124 FINAL.pdf (3.82 MB)

ETD Abstract Container

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At the Boundary of Risk and Uncertainty: Behavioral Insights Into Enterprise Risk Management

Gletsu, C. David
http://rave.ohiolink.edu/etdc/view?acc_num=case1713127726981243

Abstract Details

2024, Doctor of Philosophy, Case Western Reserve University, Management.
This dissertation investigates how managers assess ambiguous emerging exposures which lie at the intersection of measurable risk and unmeasurable uncertainty. The problem is important because it has implications for organizational resilience and the efficiency and effectiveness of the risk management function. Study 1, a qualitative interview-based exploration, suggests that risk managers assessing emerging risks in the insurance industry may not evaluate front-line business managers as critically as the “Three Lines” risk governance model recommends they should. The data indicate four potential reasons for the seeming reluctance: (1) the effect of framing emerging risks as opportunities; (2) shared social identity among risk managers and business unit managers; (3) preferences for measuring ambiguous risks qualitatively instead of quantitatively; and (4) the time horizon within which a risk is expected to materialize. Study 2, an experiment with 115 financial professionals, examines two of these reasons: shared social identity and risk framing. It finds that risk managers who identify more strongly with the business units they assess tend to be less objective and that positively framed risks are evaluated less critically. Study 3, an experiment with 193 risk managers, investigates the remaining two reasons—risk quantification and time horizon—and the influence of a risk manager’s numerical ability. The study tests how these factors affect the assessment of ambiguous risks indirectly through subjective processing fluency and perceived reliability of risk information. Results show significant indirect effects of information presentation format on willingness to challenge risk information, moderated by time horizon and numeracy. Specifically, controlling for numeracy, risk managers who are considering the distant future along with a quantitative presentation experience greater difficulty processing the risk information, which they then perceive as less reliable. Additionally, controlling for time horizon, less numerate risk managers show more skepticism toward quantitative data and more confidence in qualitative data. This research responds to calls for more behavioral studies in enterprise risk management and contributes practical insights into the perceptions and performance of risk professionals.
Timothy Fogarty (Committee Chair)
Anthony Bucaro (Committee Member)
Torben Juul Andersen (Committee Member)
Kalle Lyytinen (Committee Member)
Thomas King (Committee Member)
239 p.
Accounting; Behaviorial Sciences; Business Administration; Management
enterprise risk management (ERM); sensemaking; construal level; framing; social identity; numeracy; risk quantification; emerging risk

Recommended Citations

Citations

  • Gletsu, C. D. (2024). At the Boundary of Risk and Uncertainty: Behavioral Insights Into Enterprise Risk Management [Doctoral dissertation, Case Western Reserve University]. OhioLINK Electronic Theses and Dissertations Center. http://rave.ohiolink.edu/etdc/view?acc_num=case1713127726981243

    APA Style (7th edition)

  • Gletsu, C.. At the Boundary of Risk and Uncertainty: Behavioral Insights Into Enterprise Risk Management . 2024. Case Western Reserve University, Doctoral dissertation. OhioLINK Electronic Theses and Dissertations Center, http://rave.ohiolink.edu/etdc/view?acc_num=case1713127726981243.

    MLA Style (8th edition)

  • Gletsu, C.. "At the Boundary of Risk and Uncertainty: Behavioral Insights Into Enterprise Risk Management ." Doctoral dissertation, Case Western Reserve University, 2024. http://rave.ohiolink.edu/etdc/view?acc_num=case1713127726981243

    Chicago Manual of Style (17th edition)

case1713127726981243
142
© 2024, all rights reserved.
This open access ETD is published by Case Western Reserve University School of Graduate Studies and OhioLINK.