Risk Management Culture, Structure, and Process – Theoretical Insights and Empirical Evidence

Abstract

In the contemporary business environment, companies face a wide range of risks that necessitate effective risk management strategies. Risk management can be approached through either a traditional or integrated concept, which hinges on a company's ability to avoid, reduce, and transform risks into opportunities. This research aims to investigate the risk management practices employed by joint-stock companies in Bosnia and Herzegovina. The study will focus on evaluating the risk management culture, structure, and processes implemented by these companies. The research was conducted using a questionnaire distributed to a sample of 141 companies listed on two stock exchanges in B&H. The survey included 31 identified risk management components related to culture, processes, and organizational structure. To enhance accuracy, the survey responses were improved using a Likert scale, replacing the previous "Yes – No" dummy approach. Before administering the survey, all components were validated by a group of experts. The findings revealed that companies in Bosnia and Herzegovina (B&H) have inadequately developed components of an integrated risk management concept. The research results suggest that B&H companies primarily rely on traditional risk management approaches, failing to keep up with the global trend of implementing risk management standards. This situation may lead to adverse implications for BH companies and its economy.