Enterprise risk management (ERM) systems lessen the probability of risks harming
a frm’s reputation for a number of reasons. First, a high-quality ERM system makes
it less likely a frm will sufer a risk-based reputational crisis. Second, ERM systems
help companies to behave more responsibly towards all stakeholders, thereby ensuring frms meet stakeholders’ expectations. Third, when a crisis stemming from an
uncontrollable risk occurs, a high-quality ERM system helps to reduce the negative
impact on reputation because stakeholders will not attribute guilt to a frm which
has acted responsibly in its risk management. In this research, we explore the link
between corporate reputation and ERM systems together with the role played by
corporate social responsibility (CSR) performance as a mediator. Our results support the notion that ERM system quality enhances CSR performance as well as corporate reputation. The results also confrm that ERM systems have a positive impact
on corporate reputation via the mediating efect of CSR performance. Companies
should therefore use risk management policies to bolster both their CSR and their
reputation.
