An evaluation of the implementation of ERM in the internal control structure of a fertilizer manufacturing organisation

Abstract

Many organisations are collapsing due to continuing corporate scandals and the aftermath of the global fiscal crisis, which has made it necessary for regulators and organisations to strengthen their capacity in respect of risk management and internal controls. This situation has worsened since the COVID-19 pandemic. The chemical manufacturing industry is no different to this phenomenon since organisations are struggling to identify and manage risk optimally due to ineffective risk management systems. Hence many organisations are adopting Enterprise Risk Management (ERM) as a cornerstone to address the challenges of risk management implementation. Despite the overabundance of studies on ERM, most of these studies have been conducted in developed economies and public organisations, while neglecting developing countries such as South Africa. This study analyses the implementation of ERM in a South African chemical fertiliser organisation’s internal control environment. This study was exploratory and followed a qualitative research approach. The target population comprised employees who are directly involved in risk management and governance, known as risk specialists, from senior to lower management levels. A non-probability purposive sampling method was employed to identify the respondents fitting the predetermined sample criteria. A total number of ten face-to-face interviews were conducted. Relevant areas, research methods and data-acquiring procedures were described. Moreover, qualitative data analysis (QDA) was conducted to establish the themes from the data set. Six themes were created with each containing codes. The study found that the chemical fertiliser organisation adopted and implemented ERM in 2016 and that ERM enhanced its internal control structure. ERM factors critical in ensuring effective implementation of internal control structure were identified as well as some challenges thereto. Based on these findings, limitations were outlined together with certain recommendations and conclusions.