Research Methods Assignment Sample

1. Introduction - Research Methods

1.1 Research background

Risk management is a kind of process which helps the company in analysing, assessing and controlling the potential threats which can affect the working of the company. Companies operate in the external environment and there are many different types of changes which occur that can impact the working of the companies to a great extent (Pham, 2021). Within the financial institution, there are major changes taking place and it can cause some risk to the operational efficiency of this institution. Thus, effective internal control must be present so that these risks can be managed well and also the overall working can be improved.

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1.2 Problem statement

The competition in the market is intense and to be successful it is mandatory for companies to have strong internal control. Internal control is defined as a process in which the internal team takes measures to ensure that the performance of the company is good. Within the financial sector, there are many different types of changes taking place and as a result, the performance of the company may be affected (Sudirman et al, 2021). Thus, it is mandatory that for appropriate risk management, effective internal control is followed so that the overall management of the performance can take place. So the current study will focus on analysing the problem that how internal control can be used to effectively manage the whole working process and other operations as well.

1.3 Research questions

1. What is the concept of risk management and internal control?
2. What are the different internal control strategies for risk management within financial institutions?
3. What is the impact of using internal control on effective risk management?

1.4 Research Aim

The present study aims to assess the role of internal control for effective risk management within UK financial institutions.

1.5 Research Objectives

• To understand the concept of risk management and internal control.
• To analyse the internal control strategies for managing the risk within the financial institutions.
• To critically evaluate the impact of using internal control strategies for risk management.
• To recommend ways of improving the internal control for managing risk.

2. LITERATURE REVIEW

2.1 Understanding the concept of internal control and risk management

In the views of Malik, Zaman and Buckby, (2020) risk management is defined as the process through which the company can easily identify the potential risk or harm which can affect the company. For the successful operations of the company, the risk must be managed well so that the potential negative effects can be reduced. On the other side, Herawati and Hernando, (2020) stated that internal control is stated as a process through which the company keeps a check on the performance by using internal methods like rules, procedures and other methods so that the risk can be managed well. The companies operate in the external environment and for this, effective risk management must be present. The company can face different types of risk and in case the risk management and internal control will not be good then it will be affecting the working of the company greatly.

2.2 Analysing internal control strategies to manage risk in financial institutions

With the secondary analysis, it was seen that there are many different types of internal control strategies which are assistive to the company in managing risk and performance of the company. According to Chan, Chen and Liu, (2021), the internal audit is the most common strategy for ensuring effective internal control. It is particularly a better method as it helps in analysing and rechecking all the processes so that the risk can be assessed well. In case the risk will be managed and implemented by considering all the internal control systems then it will be improving the working of the company well.

On a critical note, Park and Kim, (2020) stated that Enterprise Risk Management (ERM) is another strategy which assists in managing the risk effectively. This is because of the reason that ERM relates to integrating the effective planning and directing the activities of the company so that the harmful effects of the risks can be minimised and as a result of this the overall development of the company can take place. Against this, Elamer, Ntim and Abdou, (2020) another internal control strategy is to measure the likelihood and impact of the risk. When the company knows the likelihood and probability of chances of risk to occur then the corrective actions can be planned well. This is necessary for the reason that when the chances are known then a better internal control strategy can be decided and this will help the financial institution in managing the working capability well.

2.3 Evaluating the impact of the internal control strategies for managing risk

Within the financial industry, there are frequent changes taking place and as a result of this, the overall efficiency of the company can be affected. Thus, the companies must comply with an effective and strong internal control system for managing risk. In the views of Lois et al, (2020) when internal control is strong then it helps the company in mitigating the risk well. It is because of the reason that when the internal working is strong then the risk will be assessed in advance and corrective actions will be implemented on time. Thus, Alawaqleh, (2021) argued that as a result of this, the negative effects of the risk will be mitigated well and consequently, the overall efficiency of the company can be managed well.

But against this, Alabdullah, (2022) argued that the major drawback of using the different internal control systems is that it increases the cost of the company and also is very time-consuming. Thus, it is necessary for the company they try to effectively manage and maintain the different methods well. Huy et al, (2021) assessed that all the methods of assessing the risk are costly and as a result, the overall expenses of the company can be affected and the profitability can also be impacted. But for making the working of the company successful an effective type of internal control must be established so that the overall efficiency of the company can be improved and all the risks are managed well.

2.4 Gap in literature

With the analysis of the current literature it is analysed that in past studies the application of the internal control techniques is not made. Only the studies have outlined that the risk management need to be implemented well. But the actual methods of the managing the risk are not evaluated well. So the current study emphasis on analysing the fact that how the internal control strategies can be used for managing the risk well. The current research will increase the knowledge relating to the use of different internal control methods which the financial institution can use for the successful working of the business.

3. RESEARCH METHODLOGY

3.1 Research design

For the conducting of the present study, an effective method must be followed. In case the methodology is not clear then the research will not be done properly. Thus, as a result of this, the overall efficiency of the project is impacted. For conducting the study, two different methods qualitative and quantitative can be used by the scholar to accomplish the study objectives. The former relates to the use of non-numeric information relating to the research topic (Lê and Schmid, 2022). On the other side, the latter includes making use of numeric information and facts and figures so that the overall completion of the research can be made successful. To accomplish the present study objectives based on analysis of the role of internal control in financial management, the use of qualitative study will be implemented. This is because of the reason that when the effective type of the method will be used then automatically the objectives will be attained well. The research topic is qualitative and as a result, the use of the qualitative method will be assistive in attaining the objectives of the current study well.

Along with the selection of the method well, it is also necessary for the researcher they select the source of data collection well. In case the data collected method will not be effective and appropriate then the quality of the study will be impacted. So for gathering the data, two different sources available are primary and secondary sources of data. The primary includes gathering the data directly from the respondent and it will be used in the study for the first time (Luo et al, 2022). On the other side, the secondary source of the data is the one which emphasises making use of the information which is already available and has been used in some of the previous research as well. For the completion of the current study, analysing the role of internal control for risk management compliance with the secondary source will be done for collecting the data. The secondary source is selected here because it will provide a very wide range of data. For the data, the use of books, journals, articles, different company reports and many other different types of existing published data will be used.

Further, the research design is defined as the method with the help of which the whole structure of the study is defined. For the completion of the present study, compliance with the descriptive research design is followed. It is particularly selected because the topic of research is descriptive and this design will assist the scholar in developing in-depth knowledge relating to the research topic.

3.2 Research methods and sources

With the collection of the data for the current study, the use of secondary resources will be made. It is particularly selected because the topic of the study relates to the financial institutions within the UK. It is not possible for the scholar they collect primary data with a large sample size. Thus, to overcome this issue the scholar has implemented the use of secondary sources (McGill et al, 2021). This includes assessing the different journals, articles, books, company articles relating to internal control and many other published data. All these will assist the scholar in collecting a variety of data and it can be assessed for the successful working of the study and attaining the objectives well.

3.3 Research procedure and ethical consideration

The procedure for the research is very simple and clear and for this compliance with the different sources is made. For this, the research topic is searched on the internet and different articles and journals are accessed. After that, the findings of these articles are evaluated and compiled to reach the research objectives. The ethical consideration included in the current study includes using those websites only which have copyrights on them (Bhangu, Provost and Caduff, 2023). In case the copyright is not present then that particular website will not be taken. Another ethical aspect considered while assessing the role of internal control is that the latest information is used. All the information included in the study must be after 2019 only and data before that will not be included. In case too old information is not used then it will not provide a better base for the completion of the study.

3.4 Practical consideration

Lê and Schmid, (2022) state that using the qualitative study is beneficial as the scholar will be in a position to develop a better understanding relating to the research topic. On the other side, McGill et al, (2021) stated that there is not any involvement of facts and figures and as a result of this more scientific research is not implemented. Thus, the researcher must have a balanced data collection so that the overall work can be improved. Further, the scholar also faced some of the limitations like the limited time. The time for the accomplishment of the objectives was very less and it may affect the completion of the study. However, the scholar was good at prioritising the task according to the deadline and this resulted in better accomplishment of the overall study.

4. Implications And Contributions To Knowledge

4.1 Practical implication

The current study based on assessing the role of internal control in risk management is useful to all the companies dealing in the financial industry of the UK. It is the reason that this study covers the whole UK financial institution and consequently all the players in the financial industry can use the findings of the current study (Hendren et al, 2023). This study will help these countries in improving the internal control and ultimately it will assist them in managing the risk well by using the internal capability.

4.2 Theoretical implications

Further, theoretically, as well, the current study will be helpful to other scholars. The current study outlined the negative impacts or the drawbacks of the internal control strategies at the time of managing risk (Jan, Lai and Tahir, 2021). Hence this will motivate another scholar to conduct the study on eradicating these negative effects and this will result in developing new studies and ultimately the issue will be overcome.

REFERENCES

Books and Journals

• Sudirman, S., Sasmita, H., Krisnanto, B. and Muchsidin, F.F., 2021. Effectiveness of Internal Audit in Supporting Internal Control and Prevention of Fraud.Bongaya Journal of Research in Accounting (BJRA),4(1), pp.8-15.
• Pham, H.N., 2021. How does internal control affect bank credit risk in Vietnam? A Bayesian analysis.The Journal of Asian Finance, Economics and Business,8(1), pp.873-880.
• Malik, M.F., Zaman, M. and Buckby, S., 2020. Enterprise risk management and firm performance: Role of the risk committee.Journal of Contemporary Accounting & Economics,16(1), p.100178.
• Herawati, N. and Hernando, R., 2020. Analysis of Internal Control of Good Corporate Governance and Fraud Prevention (Study at the Regional Government of Jambi).Sriwijaya International Journal of Dynamic Economics and Business,4(2), pp.103-118.
• Chan, K.C., Chen, Y. and Liu, B., 2021. The linear and non-linear effects of internal control and its five components on corporate innovation: Evidence from Chinese firms using the COSO framework.European Accounting Review,30(4), pp.733-765.
• Park, H. and Kim, J.D., 2020. Transition towards green banking: role of financial regulators and financial institutions.Asian Journal of Sustainability and Social Responsibility,5(1), pp.1-25.
• Elamer, A.A., Ntim, C.G. and Abdou, H.A., 2020. Islamic governance, national governance, and bank risk management and disclosure in MENA countries.Business & Society,59(5), pp.914-955.
• Lois, P., Drogalas, G., Karagiorgos, A. and Tsikalakis, K., 2020. Internal audits in the digital era: opportunities risks and challenges.EuroMed Journal of Business,15(2), pp.205-217.
• Alawaqleh, Q.A., 2021. The effect of internal control on employee performance of small and medium-sized enterprises in Jordan: The role of accounting information system.The Journal of Asian Finance, Economics and Business,8(3), pp.855-863.
• Alabdullah, T.T.Y., 2022. Management accounting insight via a new perspective on risk management companies' profitability relationship.International Journal of Intelligent Enterprise,9(2), pp.244-257.
• Huy, D.T.N., Thach, N.N., Chuyen, B.M., Nhung, P.T.H., Tran, D.T. and Tran, T.A., 2021. Enhancing risk management culture for sustainable growth of Asia Commercial bank-ACB in Vietnam under mixed effects of macro factors.Entrepreneurship and Sustainability Issues,8(3), p.291.
• Jan, A.A., Lai, F.W. and Tahir, M., 2021. Developing an Islamic Corporate Governance framework to examine sustainability performance in Islamic Banks and Financial Institutions.Journal of Cleaner Production,315, p.128099.
• Rodríguez-Espíndola, O., Chowdhury, S., Dey, P.K., Albores, P. and Emrouznejad, A., 2022. Analysis of the adoption of emergent technologies for risk management in the era of digital manufacturing.Technological Forecasting and Social Change,178, p.121562.
• Lê, J.K. and Schmid, T., 2022. The practice of innovating research methods.Organizational Research Methods,25(2), pp.308-336.
• Luo, P., Luo, M., Li, F., Qi, X., Huo, A., Wang, Z., He, B., Takara, K., Nover, D. and Wang, Y., 2022. Urban flood numerical simulation: Research, methods and future perspectives.Environmental Modelling & Software,156, p.105478.
• McGill, E., Er, V., Penney, T., Egan, M., White, M., Meier, P., Whitehead, M., Lock, K., de Cuevas, R.A., Smith, R. and Savona, N., 2021. Evaluation of public health interventions from a complex systems perspective: a research methods review.Social science & medicine,272, p.113697.
• Bhangu, S., Provost, F. and Caduff, C., 2023. Introduction to qualitative research methods–Part I.Perspectives in Clinical Research,14(1), pp.39-42.
• Hendren, K., Newcomer, K., Pandey, S.K., Smith, M. and Sumner, N., 2023. How qualitative research methods can be leveraged to strengthen mixed methods research in public policy and public administration?Public Administration Review,83(3), pp.468-485.

Author Bio

Maria Nelson   9 Years | MSc

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