IMPACT OF ENTERPRISE RISK MANAGEMENT ON FIRM PERFORMANCE IN REPUBLIC OF KOSOVO
IMPACT OF ENTERPRISE RISK MANAGEMENT ON FIRM PERFORMANCE IN REPUBLIC OF KOSOVO

Summary/Abstract: Enterprise Risk Management (ERM) has become a vital framework for organizations aiming to manage risks holistically and align risk management with strategic objectives. This study examines the impact of ERM on firm performance in the Republic of Kosovo, a post-war developing economy characterized by political volatility, regulatory immaturity, and a predominance of small and medium enterprises (SMEs). Combining empirical surveys of 55 Kosovar firms, regression analysis, and qualitative insights, the research reveals that 78.2% of firms attribute reduced risk exposure to ERM adoption, while 83.6% report improved financial performance post-implementation. These findings align with global studies that link ERM to enhanced profitability, earnings stability, and market value. However, the Kosovar context introduces unique moderators: SMEs face disproportionate challenges due to resource constraints (reported by 62.9% of respondents) and knowledge gaps, while larger firms and regulated sectors exhibit stronger ERM effectiveness. Leadership commitment and organizational culture emerge as critical enablers, yet resistance to change and difficulties in quantifying ERM’s ROI hinder adoption. Notably, ERM’s strategic value extends beyond financial metrics, with 69.1% of firms crediting it for improved corporate reputation, a crucial asset in Kosovo’s trust-scarce business environment

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