McShane et al. wrote this article in 2011 after the financial crisis of 2008. Do the findings of this research mean that organisations should not try to implement ERM?

The findings of this research seem to identify a positive correlation between the increased value of a firm and the implementation of a more sophisticated TRM - which correspond to ERM degree 1,2,3 - but when firms seem to be given the S&P ERM rating of respectively 4 ( = strong) and 5 ( = excellent) degrees, it seems that ERM implementation does not contribute to an increase in firm value, it seems it makes no significant difference in performance results. However, this does not mean that companies should not implement ERM. instead, ERM is getting more and more crucial.

Firsto of all, the worldwide economic scenario is getting too complex to rely on TRM only and a more systematic approach to risk management is necessary.

Secondly, research on ERM is still too little and controversial. The authors state it is necessary to wait a few more years - when S&P starts to apply the ERM rating to nonfinancial firms too - and get more ERM data available so as to enlarge the firm sample to other industry sectors and carry out further research in the field, as it is not even possible to generalize the results outside the insurance industry.

Thirdly, it is necessary to question every aspect of ERM, whether the relationship between ERM and firm value is stable and true in the long term, whether ERM advantages will disappear over a period of time once all companies have adopted it, whether S&P ERM construct is reliable itself, whether S&P evaluation of firm ERM is reliable, whether firm ERM capabilities change over time together with the rating, whether ERM stops firm growth and why.

Last but not least, the authors insist on the importance of investigating the source of firm value in order to understand how much of this value can be attributable to ERM implementation.