QUANTITATIVE ASSESSMENT OF RISK MANAGEMENT EFFECTIVENESS IN ORGANIZATIONS WITHIN A CORPORATE GROUP: AN ANALYSIS OF MATERIALIZED RISKS

V. B. Kravtsov () and V. A. Rozanov ()

Strategic decisions and risk management, 2026

Abstract: In corporate practice, risk management effectiveness is often assessed primarily through compliance with established procedures, including maintaining risk registers, submitting reports and holding committee meetings on schedule, and implementing risk treatment measures. Such indicators characterize the organizational maturity of the process but do not fully capture how well organizations identify and assess risks that subsequently materialize. The purpose of this study is to develop a quantitative key performance indicator for evaluating risk management outcomes by comparing risk information recorded in advance with the actual consequences of materialized risks. The methodology is based on a retrospective assessment of two characteristics: the completeness of prior risk identification and the accuracy of consequence estimates. The proposed indicator starts at a baseline value of 100% and is reduced by two adjustment components: the sum of capped relative contributions from previously unidentified materialized risks and the extent to which actual consequences differ from prior estimates for identified risks. The approach is tested through scenario modelling using an anonymized model sample of 12 hypothetical organizations. Indicator values range from 54% to 100%, with a mean of 85% and a median of 87.5%; the mean values for the two comparable groups are 91.2% and 80.6%, respectively. The calculations demonstrate that identical overall scores may result from different weaknesses: incomplete risk identification or inaccurate consequence estimates. The practical value of the approach lies in its potential to support comparisons among organizations within a corporate group, identify specific areas for improving risk management, and incorporate the assessment results into management reporting. The originality of the study is the shift from predominantly process-based assessment to a quantitative evaluation of the actual effectiveness of managing materialized risks.

Date: 2026
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