Uncertainty in Risk Definition and Its Impact on Enterprise Risk Management

Defining risk correctly is crucial for an effective Enterprise Risk Management (ERM). In the existing literature, disciplines and researchers have different perspectives on risk. It has been observed that other perspectives are reflected in risk definitions, leading to uncertainty. This ambiguity becomes a significant risk to the effectiveness of ERM. Uncertainty in the definition reduces the effectiveness of ERM by making the stages of assessing risks and taking measures against risks uncertain. This study concludes that, for an ERM to be effective, it is necessary to take proper measures against risks and assess them correctly, which is possible with a good definition of risk. Therefore, the importance of risk definition for an effective ERM is emphasized.