Search results

This paper aims to examine whether risk disclosure practices affect stock return volatility and company value in the European insurance industry.

Using a self-constructed “risk disclosure index for insurers” (RDII) to measure the extent of information disclosed on risks and using panel data regression on a sample of European insurers for 2005-2010, it tests the relationship between RDII and stock return volatility; whether this relationship is affected by financial crisis; and whether RDII affects insurance companies’ embedded value.

The main results indicate that higher RDII contributes to higher volatility, suggesting that “less is more” rather than “more is good”. However, higher RDII leads to lower volatility when the insurer has a positive net income, thus “more is good when all is good” and “less is good when all is bad”. Furthermore, the relationship between RDII and stock return volatility is not affected by financial crisis, raising concerns regarding the effectiveness of insurers’ risk disclosure to reassure the market. Moreover, higher RDII is found to impact positively on embedded value, thus contributing toward higher firm value.

The findings could drive insurers’ choices on communication and transparency, alongside regulators’ decisions about market discipline. They also suggest that risk disclosure could be used to strengthen market discipline and should be added to the other variables traditionally used in stock return volatility and firm value estimation models in the insurance industry.

This paper offers new insights in the debate on the bright and dark sides of risk disclosure in the insurance industry and provides interesting implications for insurers and their stakeholders.

The purpose of this paper is to add to the growing literature on integrated thinking and reporting by exploring the challenges of measuring integrated thinking in academic research. It provides a review of previous studies, presents a proxy measure to quantify the level of integrated thinking and investigates companies’ approach towards integrated thinking in practice.

Firstly, this study proposes a measure to quantify the level of integrating thinking. Secondly, this study implements factor analysis to identify a parsimonious representation and explore the relevance of each variable in explaining the proposed measure of integrated thinking. Thirdly, this study implements cluster analysis to determine the natural grouping of firms with a certain level of integrated thinking and to identify the existence of distinctive companies’ approaches.

The findings suggest that the proposed measure of integrated thinking could be reduced into two main principal components that explain the current practices and the future direction. Firms’ integrated thinking practices can be clustered into groups denoting various practices among firms, and exhibit routine over time. Across clusters, firms reveal significantly different characteristics highlighting the existence of systematic demographic differences.

This research does not endeavour to overcome all the measurement issues related to integrated thinking. It attempts to measure the level and companies’ approaches towards integrated thinking that can inspire further empirical studies in this field.

This study answers the call for an empirical investigation of the internal aspects of integration. This paper provides academics, companies, and policymakers with a proxy measure of integrated thinking that can inspire empirical studies and advance the understanding of integrated thinking practices.

Companies face a wide number of risks and need to have in place appropriate measures and techniques to be able to identify, manage, and monitor risks. Risk management is a fundamental responsibility of the corporate governance structure of an organization; it means managing all risks on a holistic basis, all together rather than just one, through an appropriate and systematic process. This chapter provides an overview of enterprise risk management in the United Kingdom. It presents key information on the economic system of the United Kingdom, emphasizing the role of small and medium enterprises, and presents country macroeconomic highlights. It provides a summary of regulation, practices, and authorities; it presents the key milestones of the regulation on corporate governance and reporting in the United Kingdom, and stresses the importance of corporate governance mechanism in companies' enterprise risk management practices. Further, it discusses the importance of transparency and disclosure in the context of enterprise risk management, specifically the relevance of risk management and internal control related disclosure in the annual reports and accounts. Finally, it reviews the growing academic research on enterprise risk management and previous studies on risk disclosure practices in companies' reports.