Enterprise Risk Management in the Specialty Chemical Distribution Sector: A Literature Review

Abstract

A literature review was conducted on risks in businesses, types of risks and risk management in general, and further research was conducted for three of the selected global specialty chemical distributors, namely Brenntag, IMCD and Univar. The purpose of the research is to identify the risks and types of risk confronting the specialty chemical distribution sector, how they identify their risks, manage them, and quantify their risks, if at all.

The stakeholder theory approach was adopted for the research on enterprise risk management. There was strong convergence on the risks identified from the research and the differences being only on the extent of the impact each of the risk had on the specific company. The choice of the global specialty chemical distributors, Brenntag, IMCD and Univar, for the research was justified because of their prominence in the global market space and the risks identified would be representative of the risks in the chemical distribution sector. Different companies identify their risks and the type of risks differently, but there are many similarities on the risks identified between each of them. Many of the risks identified revolves around issues in financial, operational, legal and regulatory, economics and political, markets, and safety, health and the environment.

The depth of the risks identified and analyzed by Brenntag, IMCD and Univar varies in their risk management process but they all have invested significant effort in their financial risks, especially the impact in fluctuations of interest and foreign exchange rates on their financial performances.