STRENGTHENING FIRM PERFORMANCE THROUGH ENTERPRISE RISK MANAGEMENT AND SUSTAINABILITY PERFORMANCE: EVIDENCE FROM INDONESIA

DOI:

https://doi.org/10.29303/akurasi.v9i1.857

Authors

Keywords:

Enterprise Risk Management, Firm Performance, Sustainability Performance, Stakeholder Theory

Abstract

Growing global economic uncertainty and increasing sustainability demands in developing countries, including Indonesia, require firms to integrate risk management with sustainability strategies better. This study aims to examine the effect of ERM on firm performance while accounting for sustainability performance. The study employs panel data regression on 120 non-financial companies listed on the Indonesia Stock Exchange during the period 2019–2023. The results show that both ERM and sustainability performance have a positive effect on firm performance. However, sustainability performance does not mediate the relationship between ERM and firm performance. These findings suggest that risk management and sustainability contribute to firm performance through different pathways. In practice, firms need to align risk management with sustainability strategies better, while regulators should strengthen sustainability disclosure standards.

Downloads

Download data is not yet available.

References

Adi, D., Wardoyo, K., Saifi, M., & Imamah, N. (2024). Enterprise risk management and corporate governance effect towards sustainability and performance moderated by market crash. Profit: Jurnal Administrasi Bisnis, 18(2), 185–201. https://doi.org/10.21776/ub.profit.2024.018.02.4

Afrizal, F., Oktavendi, T. W., & Irawan, D. (2025). Risk management committee and firm performance: The moderating effect of political connection. Jurnal Akuntansi dan Investasi, 26(1). https://doi.org/10.18196/jai.v26i1.20082

Ahmad, S. A., & Teo, P.-C. (2024). The implementation of enterprise risk management (ERM) frameworks in small and medium enterprises (SMEs): A literature review. International Journal of Academic Research in Business and Social Sciences, 14(9), 290–307. https://doi.org/10.6007/ijarbss/v14-i9/22353

Aifuwa, H. O. (2020). Sustainability reporting and firm performance in developing climes: A review of literature. Copernican Journal of Finance & Accounting, 9(1), 9–19. https://doi.org/10.12775/cjfa.2020.001

Al-Shaikh, F. A., Al-Adeem, Z., & Al-Qahtani, N. (2021). Determinants of enterprise risk management adoption and implementation: Evidence from Saudi Arabia. International Journal of Economics and Financial Issues, 11(2), 65–74.

Anggraini, A., & Hidayat, N. (2025). The influence of company complexity and risk management on sustainability performance. International Journal of Social Science, Humanity & Management Research, 4(1), 118–126. https://doi.org/10.58806/ijsshmr.2025.v4i1n14

Anita, & Amalia, D. P. (2021). Pengaruh tanggung jawab sosial dan kepemilikan terkonsentrasi terhadap kinerja keuangan. Jurnal Ekonomi Modernisasi, 17(1), 54–68. https://doi.org/10.21067/jem.v17i1.5283

Anton, S. G., Elena, A., & Nucu, A. (2020). Enterprise risk management: A literature review and agenda for future research. Journal of Risk and Financial Management, 13(11), 281. https://doi.org/10.3390/jrfm13110281

Anugerah, R., Ariyanto, N. R., & Sari, R. N. (2023). Effect of enterprise risk management and corporate governance mechanisms on firm performance: Evidence from listed companies in Indonesia. Problems and Perspectives in Management, 21(3), 589–600. https://doi.org/10.21511/ppm.21(3).2023.46

Arrive, J., Feng, M., Yan, Y., & Chege, S. M. (2018). The involvement of telecommunication industry in the road to corporate sustainability and corporate social responsibility commitment. Corporate Social Responsibility and Environmental Management, 25(4), 565–576. https://doi.org/10.1002/csr.1667

Ayudhea, Y., & Puspita, D. A. (2023). Analisis prediksi kebangkrutan perusahaan sub sektor pariwisata, restoran dan hotel sebelum dan saat pandemi Covid-19. Nominal: Barometer Riset Akuntansi dan Manajemen, 12(2), 242–253. https://doi.org/10.21831/nominal.v12i2.59416

Azar, B. K., & Ulpah, M. (2024). The effect of enterprise risk management (ERM) implementation on operational performance and firm value on Indonesian agricultural sector. Dinasti International Journal of Economics, Finance & Accounting, 5(4), 2338–2350. https://doi.org/10.38035/dijefa.v5i4.2873

Bhandari, K. R., Ranta, M., & Salo, J. (2022). The resource-based view, stakeholder capitalism, ESG, and sustainable competitive advantage: The firm's embeddedness into ecology, society, and governance. Business Strategy and the Environment, 31(4), 1525–1537. https://doi.org/10.1002/bse.2967

Biju, A. V. N., Geetha, S., Prasad, S., Sasidharan, A., & Jayachandran, A. (2025). ESG–firm performance nexus: Evidence from an emerging economy. Business Strategy and the Environment, 34(3), 3469–3496. https://doi.org/10.1002/bse.4152

Boffo, R., & Patalano, R. (2020). ESG investing: Practices, progress and challenges. OECD. https://doi.org/10.1787/b4f71091-en

Carvajal, M., & Nadeem, M. (2023). Financially material sustainability reporting and firm performance in New Zealand. Meditari Accountancy Research, 31(4), 938–969. https://doi.org/10.1108/MEDAR-06-2021-1346

Chartpolrak, P., & Tangthong, S. (2020). Causes and effects between an enterprise risk management framework and firm financial performance for energy efficiency services. International Journal of Innovation, Creativity and Change, 14(11), 882–917.

Dayal, M., Soni, N., & Aggarwal, R. (2024). Linking ESG disclosure to firm performance and risk. Indian Journal of Marketing, 54(5), 24–39. https://doi.org/10.17010/ijom/2024/v54/i5/174641

Dewi, A. A., Saraswati, E., Rahman, A. F., & Atmini, S. (2024). Moderating role of enterprise risk management in the relationship between sustainability performance and a firm's competitive advantage. Problems and Perspectives in Management, 22(2), 226–239. https://doi.org/10.21511/ppm.22(2).2024.18

Ding, L., Cui, Z., & Li, J. (2024). Risk management and corporate ESG performance: The mediating effect of financial performance. Finance Research Letters, 69, Article 106274. https://doi.org/10.1016/j.frl.2024.106274

Donaldson, T., & Preston, L. E. (1995). The stakeholder theory of the corporation: Concepts, evidence, and implications. Academy of Management Review, 20(1), 65–91. https://doi.org/10.2307/258887

Faedfar, S., Özyeşil, M., Çıkrıkçı, M., & Benhür Aktürk, E. (2022). Effective risk management and sustainable corporate performance integrating innovation and intellectual capital: An application on Istanbul exchange market. Sustainability, 14(18), Article 11532. https://doi.org/10.3390/su141811532

Faqera, A. F., Jadi, D., Aniza, N., & Aziz, A. (2026). Disaggregated financial risk and ESG performance: Firm-level evidence from Malaysia. Cogent Business & Management, 13(1). https://doi.org/10.1080/23311975.2025.2597709

Fitriana, S., & Wardhani, R. (2020). The effect of enterprise risk management and sustainability reporting quality on performance: Evidence from Southeast Asia countries. International Journal of Economic Policy in Emerging Economies, 13(4), 344–355. https://doi.org/10.1504/IJEPEE.2020.109588

Florio, C., & Leoni, G. (2017). Enterprise risk management and firm performance: The Italian case. The British Accounting Review, 49(1), 56–74. https://doi.org/10.1016/j.bar.2016.08.003

Fraser, J. R. S., Quail, R., & Simkins, B. J. (2022). Questions asked about enterprise risk management by risk practitioners. Business Horizons, 65(3), 251–260. https://doi.org/10.1016/j.bushor.2021.02.046

Freeman, R. E. (1984). Strategic management: A stakeholder approach. https://doi.org/10.2139/ssrn.263511

Ho, L., Nguyen, V. H., & Dang, T. L. (2024). ESG and firm performance: Do stakeholder engagement, financial constraints and religiosity matter? Journal of Asian Business and Economic Studies, 31(4), 263–276. https://doi.org/10.1108/JABES-08-2023-0306

Iznillah, M. L., & Rasuli, M. (2024). Reaksi investor terhadap corporate sustainability performance: A review of literature using stakeholder theory. 4th Proceeding of Conference on Economic and Business, 2, 300–311. https://doi.org/10.56870/4pce9r80

Javed, M. Y., et al. (2024). Exploring sustainable investments: How they drive firm performance in Indian private and publicly listed companies. Sustainability, 16(16), 1–17. https://doi.org/10.3390/su16167240

Junaidi, W., & Hanggraeni, D. (2024). Revealing the impact of ERM and ESG disclosures on the performance of non-financial public companies in Indonesia: An empirical study from 2017–2022. Eduvest: Journal of Universal Studies, 4(11), 10847–10858. https://doi.org/10.59188/eduvest.v4i11.44745

Kalash, I. (2023). Do agency costs and business risk affect the corporate sustainability–financial performance relationship? Journal of Economic and Administrative Sciences. https://doi.org/10.1108/JEAS-07-2023-0172

Karina, R., Lestari, F., & Ivone, I. (2023). The effect of enterprise risk management on financial performance and firm value: The role of environmental, social and governance performance. Global Financial Accounting Journal, 7(2), 213. https://doi.org/10.37253/gfa.v7i2.8706

KBA News. (2025). Assessing Indonesia's economic resilience: From crisis to recovery (2020–2025). https://kbanews.com/english-edition/assessing-indonesias-economic-resilience-from-crisis-to-recovery-2020-2025/

Khan, A. K., Shah, S. Z. A., & Ahmad, W. (2022). The effect of enterprise risk management on firm performance: The mediating role of research & development investment. International Journal of Management Science and Engineering Management. https://doi.org/10.1142/S1363919624500233

KPMG. (2025). Top geopolitical risks 2025. https://assets.kpmg.com/content/dam/kpmgsites/xx/pdf/2025/03/top-geopolitical-risks-2025-web.pdf

Kristianthy, L. T., & Ekawati, E. (2024). The effect of company growth on sustainable performance: A moderating perspective of stock mispricing in Indonesia and Japan. Investment Management and Financial Innovations, 21(2), 323–335. https://doi.org/10.21511/imfi.21(2).2024.26

Kuo, K. C., Yu, H. Y., Lu, W. M., & Le, T. T. (2022). Sustainability and corporate performance: Moderating role of environmental, social, and governance investments in the transportation sector. Sustainability, 14(7), Article 4095. https://doi.org/10.3390/su14074095

Kuruppu, S. C., Milne, M. J., & Tilt, C. A. (2019). Gaining, maintaining and repairing organisational legitimacy: When to report and when not to report. Accounting, Auditing & Accountability Journal, 32(7), 2062–2087. https://doi.org/10.1108/AAAJ-03-2013-1282

Loureiro, B., Model, E. R., & Yang, H. (2021). Disclosure of enterprise risk management in ASEAN 5: Sustainable development for green economy. IOP Conference Series: Earth and Environmental Science, 716(1), Article 012101. https://doi.org/10.1088/1755-1315/716/1/012101

Malik, I. (2026). A literature review: Effect of enterprise risk management (ERM) implementation on micro, small and medium enterprises (MSMEs). Eksis: Jurnal Ilmiah Ekonomi dan Bisnis, 14(1), 1–4. https://doi.org/10.33555/embm.v14i1.267

Malik, M. F., Zaman, M., & Buckby, S. (2020). Enterprise risk management and firm performance: Role of the risk committee. Journal of Contemporary Accounting & Economics, 16(1). https://doi.org/10.1016/j.jcae.2019.100178

Manab, N. A., & Aziz, N. A. A. (2019). Integrating knowledge management in sustainability risk management practices for company survival. Management Science Letters, 9(4), 585–594. https://doi.org/10.5267/j.msl.2019.1.004

Mangla, S. K., Sharma, Y. K., Patil, P. P., Yadav, G., & Xu, J. (2019). Logistics and distribution challenges to managing operations for corporate sustainability: Study on leading Indian diary organizations. Journal of Cleaner Production, 238, Article 117620. https://doi.org/10.1016/j.jclepro.2019.117620

Medina, F. A. S., & Kimura, H. (2022). Impacts of the COVID-19 pandemic on operational losses. Frontiers in Applied Mathematics and Statistics, 8. https://doi.org/10.3389/fams.2022.940102

Murinda, C. S., Islahuddin, I., & A, N. (2021). Firm value: Does corporate governance and research & development investment matter? Jurnal Reviu Akuntansi dan Keuangan, 11(2), 266–284. https://doi.org/10.22219/jrak.v11i2.16786

Mykyta, S. (2025). Global trends in logistics: The impact of geopolitical factors on supply chains. The American Journal of Management and Economics Innovations, 7(3), 46–55. https://doi.org/10.37547/tajmei/Volume07Issue03-07

Nasr, A. K., et al. (2019). How enterprise risk management (ERM) can affect short-term and long-term firm performance: Evidence from the Iranian banking system. Entrepreneurship and Sustainability Issues, 7(2), 1387–1403. https://doi.org/10.9770/jesi.2019.7.2(41)

Neacşu, M. C., Negut, S., & Vlăsceanu, G. (2018). The impact of geopolitical risks on tourism. Amfiteatru Economic, 20 (Special Issue 12), 633–647. https://doi.org/10.24818/EA/2018/S12/870

Nguyen, T. A. (2026). Enterprise risk management and earnings management under financial distress: Evidence from an emerging market. Cogent Business & Management, 13(1). https://doi.org/10.1080/23311975.2026.2625536

Nkansa, P., Barr-Pulliam, D., & Walker, K. (2025). From compliance to strategic partnerships: The role of internal audit in enterprise risk management and opportunities for future research. Journal of Risk and Financial Management, 18(12), Article 707. https://doi.org/10.3390/jrfm18120707

Noth, F., & Schüwer, U. (2023). The impact of natural disasters on the performance and solvency of US banks. International Journal of Managerial Finance. https://doi.org/10.1108/IJMF-08-2020-0406

Nugroho, W. C. (2025). Financial distress: Studi intellectual capital dan karakteristik direksi pada perusahaan ritel di Indonesia. Owner, 9(1), 421–435. https://doi.org/10.33395/owner.v9i1.2487

Nur, A., & Pangestuti, F. (2024). Analisis kinerja organisasi di lingkungan Sekretariat Jenderal Kemendagri. Jurnal Ekonomi Kreatif dan Organisasi, 3(2). https://doi.org/10.57151/jeko.v3i2.382

Qaisi, F. A. (2019). Corporate social responsibility effect on firms financial performance in Jordan. International Journal of Monetary Economics and Finance, 12(4), 325–342. https://doi.org/10.1504/IJMEF.2019.101942

Quang, L. V., Ngoc-Long, N., & Giang, P. X. (2024). Enterprise risk management and firm performance: Exploring the roles of knowledge, technology, and supply chain. Problems and Perspectives in Management, 22(2), 150–164. https://doi.org/10.21511/ppm.22(2).2024.13

Rahi, A. F., Akter, R., & Johansson, J. (2022). Do sustainability practices influence financial performance? Evidence from the Nordic financial industry. Accounting Research Journal, 35(2), 292–314. https://doi.org/10.1108/ARJ-12-2020-0373

Rahmaniati, N. P. G., & Ekawati, E. (2024). The role of Indonesian regulators on the effectiveness of ESG implementation in improving firms' non-financial performance. Cogent Business & Management, 11(1). https://doi.org/10.1080/23311975.2023.2293302

Ramadana, M., Julia, J., & Wati, E. (2025). Green practices on sustainability performance: The moderating role of slack resources. Jurnal Akuntansi dan Keuangan Indonesia, 22(1). https://doi.org/10.7454/jaki.v22i1.1973

Rehman, H., Ramzan, M., Zia, M., Haq, U., & Hwang, J. (2021). Risk management in corporate governance framework. Sustainability, 13(9), Article 5015. https://doi.org/10.3390/su13095015

Resende, S., Monje-Amor, A., & Calvo, N. (2024). Enterprise risk management and firm performance: The mediating role of corporate social responsibility in the European Union region. Corporate Social Responsibility and Environmental Management, 31(4), 2852–2864. https://doi.org/10.1002/csr.2719

Roscoe, S., Mena, C., & Mena, F. (2023). Geopolitical disruptions in global supply chains: A state-of-the-art literature review. International Journal of Production Research. https://doi.org/10.1080/09537287.2023.2286283

Saeidi, P., Saeidi, S. P., Gutierrez, L., Streimikiene, D., Alrasheedi, M., & Mardani, A. (2021). The influence of enterprise risk management on firm performance with the moderating effect of intellectual capital dimensions. Economic Research-Ekonomska Istraživanja, 34(1), 122–151. https://doi.org/10.1080/1331677X.2020.1776140

Shatnawi, S. A., et al. (2020). The factors influencing the enterprise risk management practices and firm performance in Jordan and Malaysia. International Journal of Recent Technology and Engineering, 8(5), 687–702. https://doi.org/10.35940/ijrte.d8114.018520

Sitinjak, J., & Khabibah, N. A. (2023). Literatur review manfaat dari enterprise risk management di Indonesia. Jurnal Ekonomi STIEP, 8(1), 92–100. https://doi.org/10.54526/jes.v8i1.137

Supriyanto, S., Ramadana, M., & Istiqomah, N. (2025). The role of green investment in enhancing environmental disclosure in Indonesia. Asian Review of Accounting. https://doi.org/10.1108/ARA-09-2024-0274

Tewu, M. L. D., Bernarto, I., Suwarno, S., & Lisdiono, P. (2024). The effect of enterprise risk management and compliance practices on the firm performance of Indonesian banking companies. Indonesian Journal of Business and Entrepreneurship, 10(1), 52–64. https://doi.org/10.17358/ijbe.10.1.52

Widyastuti, T. (2024). Exploring the influence of green accounting on sustainability performance: A literature review. Greenation International Journal of Economics and Accounting, 2(1), 53–60. https://doi.org/10.38035/gijea.v2i1.166

World Economic Forum. (2025). The global risks report 2025: 20th edition. https://reports.weforum.org/docs/WEF_Global_Risks_Report_2025.pdf

World Risk Report 2024. (2024). GoodStats Data. Institute for International Law of Peace and Armed Conflict (IFHV) at Ruhr University Bochum. https://data.goodstats.id/statistic/indonesia-masuk-jajaran-negara-dengan-risiko-bencana-alam-tertinggi-46H5e

Xie, J., Nozawa, W., Yagi, M., Fujii, H., & Managi, S. (2019). Do environmental, social, and governance activities improve corporate financial performance? Business Strategy and the Environment, 28(2), 286–300. https://doi.org/10.1002/bse.2224

Zheng, X., & Bu, Q. (2024). Enterprise ESG performance, digital transformation, and firm performance: Evidence from China. SAGE Open, 14(4), 1–18. https://doi.org/10.1177/21582440241291680

Downloads

Published

2026-06-30

How to Cite

Ramadana, M., Monica, S., & Krisyadi, R. (2026). STRENGTHENING FIRM PERFORMANCE THROUGH ENTERPRISE RISK MANAGEMENT AND SUSTAINABILITY PERFORMANCE: EVIDENCE FROM INDONESIA. Akurasi : Jurnal Studi Akuntansi Dan Keuangan, 9(1), 71–90. https://doi.org/10.29303/akurasi.v9i1.857

Issue

Vol. 9 No. 1 (2026): Jurnal Studi Akuntansi dan Keuangan, June 2026

Section

Articles

License

Copyright (c) 2026 Mariska Ramadana, Sellina Monica, Robby Krisyadi

Creative Commons License

This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Authors who publish in Akurasi: Jurnal Studi Akuntansi dan Keuangan agree to the following terms:

  • Authors retain the copyright of their articles.
  • Authors grant Akurasi: Jurnal Studi Akuntansi dan Keuangan the right of first publication.
  • Articles are licensed under the Creative Commons Attribution-ShareAlike 4.0 International License (CC BY-SA 4.0).
  • This license allows anyone to copy, distribute, display, and adapt the articles for any purpose, including commercial use, as long as proper credit is given to the author(s) and the source, and derivative works are distributed under the same license.
  • All published articles are open access and may be used for educational, research, and scientific purposes.