Risk management and the impact of inflation uncertainty

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School of Business | Bachelor's thesis
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Authors

Date

2023

Department

Laskentatoimen laitos

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Mcode

Degree programme

Laskentatoimi

Language

en

Pages

26+5

Series

Abstract

Inflation presents companies a cyclical risk factor which creates pressures for risk managers to evaluate and adjust risk responses to meet the changing market conditions. Enterprise risk management (ERM) has gained widespread acceptance during the past decade as a holistic risk management framework. It has been adapted and encoded on a global scale into management accounting practices and risk managers have aimed at institutionalizing its principles into organizational cultures. Yet little research describing the explicit risk management processes of companies exists. The purpose of this thesis is to study the process of inflation risk management exercised by a Finnish construction company. This process was identified and analyzed using the institutional framework by Burns and Scapens (2000). Additionally, the principles of the ERM framework by COSO (2017) were introduced to gain understanding of enterprise-wide risk management elements. Together, these frameworks provided grounds for the evaluation of the emerging process of inflation risk management. This thesis presents evidence from a single case study suggesting that the process of mitigating inflation risk in the construction sector is a careful and highly institutionalized practice. The findings indicate that the institutionalization of ERM as a feature of organizational culture enables the elasticity and responsiveness of an otherwise standardized inflation risk management practice. The findings also draw attention to the importance of identifying the cyclicity of inflation risk as a feature of its management practice and provide contradicting evidence to the used theoretical frameworks.

Description

Thesis advisor

Taussi, Thomas

Keywords

risk management, inflation, enterprise risk management, ERM, case study

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https://urn.fi/URN:NBN:fi:aalto-202307094462

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