Enterprise Risk Management

CHAPTER 27Establishing ERM Systems in Emerging Countries

DEMIR YENER, PhD

Senior Finance and Governance Advisor, Deloitte Consulting, LLP.

INTRODUCTION

The purpose of this chapter is to discuss enterprise risk management (ERM) in the context of corporate governance in emerging market corporations. There is a growing interest in improving corporate governance practices in emerging markets following the 1997–1998 financial crises in the Far East and Russia. With the contagion effects of the crisis in many other emerging markets, there was a realization that corporate governance practices had to be improved along with the financial sector infrastructure. This was the genesis for establishing a globally appealing set of principles or rules of good corporate governance.

Upon the initiation of international donors and G7 countries, the Financial Stability Forum was convened. The Principles of Corporate Governance were developed by the Organization for Economic Cooperation and Development (OECD) in 1999¹ and were later revised in 2004. During this period, other standards of business conduct were also introduced to provide guidance in a number of critical areas of global cooperation for business and finance among nations. Many emerging countries have since adopted the OECD principles and developed their own corporate governance codes.

Improving corporate governance is understood to improve the chances of accessing the various sources of finance. In most emerging market countries, the ...