Bankruptcy Prediction: A Literature Review Of Enterprise Risk Management (ERM) Approaches Financial Management Review

Abstract

The concept of bankruptcy in financial management also includes the analysis of a company's financial health, involving the evaluation of financial ratios, liquidity, solvency, and operational efficiency. The objective of this research is to determine whether the Enterprise Risk Management approach can be used to predict the risk of bankruptcy in the context of corporate financial management and to identify the advantages and limitations of the Enterprise Risk Management approach in predicting bankruptcy risk compared to other traditional methods in financial management. The method used in this research is reflective of a systematic approach applied in conducting a literature review to support understanding of bankruptcy prediction through the Enterprise Risk Management (ERM) approach in the context of financial management. The findings of this research indicate that through its holistic approach, ERM also considers operational, reputational, and strategic risks, which may potentially contribute to bankruptcy risk. However, the implementation of ERM often requires significant time and resources, and obtaining the necessary data can be challenging.