Management Accounting Section Midyear Meeting

Building Adaptive Capacity: The Role of Advanced Analytics in Risk Management

• In Event: Survey Studies on Management Controls

Abstract

In this study, we theoretically discuss the benefits and costs of risk information integrated into the strategy and the use of advanced analytics for risk management purposes with regard to the adaptive capacity of organizations. Furthermore, we investigate whether the adoption of an advanced analytics strategy helps overcome the costs induced by the joint use of both risk management design choices by giving direction and communicating a clear strategic focus to employees, including senior management. We base our empirical analyses on survey data collected in summer 2020 from 174 non-financial companies, which allows us to exploit the challenging setting of the Covid-19 pandemic for organizations and their risk management. Our results show a substitutive relationship between strategy integration of risk information and the use of advanced analytics for risk management purposes, as well as a three-way complementarity between the two risk management design choices and an advanced analytics strategy with regard to adaptive capacity. Thus, we contribute to the literature with new insights into the potential benefits of linking risk management practices to business intelligence and analytics in light of better decision-making and control.

Authors

• Evelyn Caroline Braumann, VU University Amsterdam

• Aleksandra Klein, Vlerick Business School

• Arthur Posch, IMC University of Applied Sciences Krems