Modelling the Fragility and Resilience of Enterprises
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Date
2017-11
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The British University in Dubai (BUiD)
Abstract
This study attempts to expand the existing literature on modelling enterprise fragility and enterprise resilience and their impact on risk management performance. This research employed a quantitative method to collect data from risk management practitioners. It attempted to investigate the contribution of risk events on inducing enterprise fragility and the contribution of risk attributes on enhancing the enterprise resilience to the risk events that induce enterprise fragility. Severity indexes, exploratory factor analysis and confirmatory factor analysis were conducted to rank and reduce data. Moreover, structural equation models were developed to explore the root-causal relationship that links enterprise fragility and enterprise resilience to risk related managerial performance.
The research findings showed that risk events that induce the fragility of enterprise strategy are grouped into three latent variables: business models and plans, financial and strategic innovations, and globalization and politics. Risk events that induce the fragility of enterprise governance are grouped into three latent variables: risk guidelines, risk auditing and risk communication. Risk events that induce the fragility of enterprise operations are grouped into four latent variables: internal processes, people, systems, and external events. Risk events that induce the fragility of enterprise business units are grouped into two latent variables: failure of business processes and mis-utilization of assets. Risk events that induce the fragility of enterprise projects are grouped into four latent variables: risk monitoring, project scope, risk responding and risk integrating. Attributes that enhance enterprise resilience are grouped into five latent variables: risk governance, risk appetite, risk informed decision-making, risk culture, and risk policies design.
Furthermore, structural equation models have been converged to show that enterprise fragility can impact risk management performance and so can enterprise resilience. The results show acceptable model fitness for the fragility of strategy, the fragility of governance and the fragility of business unit and so is the case for resilience.
This study contributes to knowledge by presenting a conceptual model to assess enterprise fragility, and it incorporates different enterprise levels. This assessment tool will help practitioners to scale how fragile an enterprise is, and so they can anticipate the enterprise robustness and resilience. For future research, it is recommended to develop a resilience or anti-fragility assessment tool in order to show the other side of the coin. In addition, it is recommended to do similar studies on sector levels to consider the specific conditions of each sector.
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DISSERTATION WITH DISTINCTION
Keywords
enterprise fragility, enterprise resilience, risk management