Volume : 3 | Issue : 3 | March 2014 ISSN - 2250-1991

Research Paper Architecture

Risk Management and Corporate Real Estate

Performance

Wahidah Shah Faculty of Architecture, Planning and Surveying, Universiti Te-

Mohamad Khan knologi MARA, 40450 Shah Alam, Selangor, Malaysia
Faculty of Architecture, Planning and Surveying, Universiti Te-
Hamimah Adnan,
knologi MARA, 40450 Shah Alam, Selangor, Malaysia
Ahmad Shazrin Faculty of Architecture, Planning and Surveying, Universiti Te-
Mohamed Azmi knologi MARA, 40450 Shah Alam, Selangor, Malaysia
Abdul Hadi Nawawi
Faculty of Architecture, Planning and Surveying, Universiti Te-
Muhammad Redza
Rosman
knologi MARA, 40450 Shah Alam, Selangor, Malaysia
This purpose of this paper is to identify the types of risk associated with corporate real estate (CRE) and the risk management
ABSTRACT

strategies adopted by the companies. The findings will also measure companies’ performance and analyse the correlation
with CRE risk management strategies. Interviews were held to gather the information by the respondents on their application
of CRE risk management strategies. Economic Value Added (EVA) was used as a tool to measure the company performance
and the results were then correlated with the mean of strategies derived from the analysis. . It was found that most of the
organisation has taken risk management as part of their corporate strategic planning.

KEYWORDS Risk management, corporate real estate, performance.

INTRODUCTION
Risk management practice emerged over the past years and is
rapidly developing as a discipline, vocation and business service.
In many countries, risk management is gaining increased recog-
nition as a significant contributor in the efficiency and effective-
ness of an organization. In the pursuit of management excel-
lence, organizations have developed and implement strategies
focus in terms of vision, mission, core values and objectives.
Risks are among the critical issues that should be undertaken
in ensuring the best performance in an organization, projects
or their work package. Successful achievement of objectives de-
pends on the management of risks to ensure the optimal deci-
sions are made to manage and control the risks.
Bajaj (1997) reported that if a risk is not identified it cannot be
controlled, transferred or otherwise managed. Therefore risk
identification is a necessary first step before risks can be analyz-
ed and an appropriate response determined. Executives face a
number of risks in managing corporate real estate assets. Most
important are varied risks associated with property development.
The risks incurred in development activities run the gamut from
financing risk to physical risks to regulatory risk (Huffman, 2002).
CRE risk management is rapidly being integrated into the cor-
porate culture. There are several risks management strategies
available to the CRE executive: due diligence, avoidance, insur-
ance, hedging and diversification. The key element to all these
strategies is the identification and impact assessment of risks.
Risk management is not a one-off activity; instead it should be
applied continuously and rigorously Bajaj (1997).
Corporate real estate was referred to by Zeckhauser and Sil-
verman (1981 and 1983) as the land and buildings owned by
companies not primarily in the real estate business. Compa-
nies in the real estate business are generally taken to include
developers, investors, and traders in real estate per se. Bans-
field (2005) defines corporate real estate more precisely as
real estate held for operational purposes, ancillary to the main
purpose of a business or organization. For Manning and Rou-
lac (1999) corporate real estate “includes real properties that
house productive activities of a corporation and primary busi-
ness of the firm is not related to development, investment,
management or financing of real estate assets. Corporate real
estate includes all spaces involved in supporting a company’s
business and may include space for administrative and man-
agement functions, manufacturing, warehousing, selling/mar-
keting and distribution activities (Roulac and Manning 1999).
Bon et.al (1994) defined it as the management of building
and parcels of land at the disposal of private and public or-
ganizations that are not primarily in the real estate business.
Corporate real estate is an input factor in the production pro-
cess and provides spaces to support the outputs of the firm.
CRE constitutes a large percentage of fixed assets of a firm.
Corporate firms own a significant amount of real estate for
operation, occupation, investment and development. CRE has
to be managed as an integral part of business resources man-
agement in the face of intense competition and technologi-
cal advances (Ting, 2003). In corporate real estate, the main
objective is to maximize the value of property no matter the
property is used as investment asset or operational asset (Ed-
wards & Ellison, 2004).
To assist in the classifications of CRE, Adendorff and Nkado
(1996) identified two major types of real estate owned by a
firm i.e. strategic property and core property. Strategic prop-
erty is real estate that firms need to own and control for its
operations and long term business strategy. Examples of such
properties are the manufacturing plants, warehouses etc. Core
property refers to real estate that a firm needs to control for
its existing and or future operations and for medium term
business strategy. Examples of such properties are commercial,
industrial or retail facilities from which the company operates.
RISK IN CORPORATE REAL ESTATE
During the last two decades, corporate real estate managers

1 | PARIPEX - INDIAN JOURNAL OF RESEARCH

Volume : 3 | Issue : 3 | March 2014
have gained a greater understanding of how real estate and
associated facilities support their organizations with the devel-
opment of tools to assist them with managing the workplaces
and performance measures to assess their efficiency and effec-
tiveness. (Gibson et al, 2002).
Corporate real estate managers have long understood the con-
cept of risk. Much of their work is driven by transactions and
projects related to new or changing workplace requirements.
They have developed tools to ensure that these projects come in
on time and within budget in an attempt to manage both the
financial and operational risk at the single asset level. If organi-
zations are attempting to manage the corporate real estate risk,
then they need a framework to identify the sources of risk Si-
mons (1999). Operational risk is for many organizations the most
common form of risk (Williams et al, 1999). Operational risk is
clearly very common since it is “the risk of loss resulting from
inadequate or failed internal processes, people, and systems or
from external events” (Basel Committee on Banking Supervision,
2003). Executives face a number of risks in managing corporate
real estate assets. Most important are varied risks associated
with property development. The risks incurred in development
activities run the gamut from financing risk to physical risks to
regulatory risk (Huffman, 2002). Bajai (2001) examines the risks
associated with construction and bidding (or cost estimation) spe-
cifically. A number of factors enter into the decision to bid. Most
relevant to corporate decision makers in estimating the construc-
tion costs of corporate facilities would be such variables as the
size of the project, duration, and the state of the market.
Real estate development also entails significant interest rate
risk associated with construction loans, the effect of interest
rates on the demand for rental space, and the effect of inter-
est rates changes at any future sale or refinancing. Cameron, et
al (1990) illustrates various methods of offsetting interest rate
risk including the use of interest rate caps, collars and swaps.
However, given the multitude of activities comprising real estate
development, no single risk management strategy can suffice.
Risks that can be incurred outside the development sphere in-
clude the financial risks incurred in leasing, purchasing and the
potential reversion of the asset; and various physical risks such
as design weaknesses and site and location risks. Corporate real
estate will also be burdened by the risks associated with the reg-
ulation of such assets by a host of local, state and national agen-
cies (Huffman, 2002). As noted above, one of the more difficult
is risks are assigning accurate values to corporate real property.
According to Brueggeman, et al, (1990), one of management’s
greatest challenges is to capture “hidden value.” The underes-
timation of corporate property assets artificially depresses share
values and can provide the incentive for hostile takeovers.
In relation to the research, the main purpose of this study is
actually to identify the type of risks associated with corporate
real estate in manufacturing companies in Malaysia. It also
aims to investigate the CRE risk management strategies. Using
EVA as a measurement tool, the selected companies’ perfor-
mance is measured in order to establish any correlation be-
tween the CRE risk management strategies and performance.
PROBLEM STATEMENT
Although there are abundance of research papers on Risk Man-
agement concept, but not many researchers are looking into the
relationship of Corporate Real Estate Risk Management and risk
management will not remove all risk from the organization; its
principal aim is to ensure that risks are managed in the most effi-
cient manner. Risk management is a continuous, forward-looking
process that is an important part of business and technical man-
agement processes that should be viewed as a positive process.
AIM AND OBJECTIVES
The main objectives of this study are first, to identify risk as-
sociated with CRE and second, to analyse the CRE risk man-
agement strategies. The study also aims to measure company’s
performance and analyse the correlation between CRE risk
management strategies.
2 | PARIPEX - INDIAN JOURNAL OF RESEARCH
ISSN - 2250-1991
METHODOLOGY AND ANALYSIS
The data and feedback gathered from the questionnaire is
analyzed by using SPSS 16.0 (Statistical Package for Social Sci-
ence) program. This method is selected because the output
from the SPSS analysis is comprehensive for this type of study.
The SPSS output is designed to give detail breakdown of the
responses in various categories and cross-tabulated them for
easy reference and interpretation.
The companies’ performance is measured by using a financial
measuring tool identified as EVA. As reviewed in the literature
review, Boehlje (2000) claimed that Economic Value Added is
a critical concept in evaluating the performance of any busi-
ness, which indicated that EVA allows management to quickly
see in which way a company is heading and that EVA serves
as a good predictor of future performance. From a commer-
cial standpoint, Campbell (2004) claimed that Economic Val-
ue Added is the most successful performance metric used by
companies and their consultants.
In order to find a correlation between CRE risk management
strategies and company performance, the findings from the
questionnaire and company performance using EVA results
are analyze using SPSS and Microsoft Excel for Windows XP/
Vista program. In relation with the first and second research
objective for this study, which is to identify types of risk asso-
ciated with CRE and to study the CRE risk management strat-
egies, it has been determined by analyzing results that were
obtained from the questionnaires that have been distributed
to 40 manufacturing companies that is operating within the
vicinity of Klang Valley (Kuala Lumpur and Selangor). Besides
that, the results are also the compilation of answers from
semi-structured interview conducted with key personnel in the
manufacturing. It is further discussed in the discussion section.
Only 7 companies out of the 25 respondents performance
were selected to be measured because they were listed in the
Bursa Malaysia, hence financial performance were able to be
conducted with the availability of annual report that contains
financial statements. In order to establish the correlation be-
tween the performance and CRE risk management strategies,
the findings were analyzed using the SPSS computer pro-
gramme as well as Microsoft office excel tools.
The questionnaires set comprises of five (5) sections, catego-
rized as Section 1, Section 2, Section 3, Section 4 and Section
5. Details of each section are as follows:-
Section 1: General Information Questions
Section 2: Risk Management Practice Questions
Section 3: Identifying Corporate Real Estate Risk
Section 4:Application of CRE risk management strategies
Section 5: The contribution of CRE risk management in com-
pany’s performance
Expected answers were listed and the respondents need to
only tick at the appropriate box that provide direct answer for
the question. The respondents were also encouraged to write
down their opinion and suggestion in the given boxes.
The analysis presented below is based solely on the SPSS sta-
tistical analysis done on the survey feedbacks, which were
gathered from the distributed questionnaire. From this analy-
sis, some interpretations of the data are also presented below.
SECTION 1- GENERAL INFORMATION
Respondents Profile
TABLE 8.1 THE PERCENTAGE OF RESPONDENTS’ POSITION
Position Number of Percentage (%)
Respondents
Supervisor/Managerial 8 32
Senior Manager/ Vice 9 36
President
General Manager/CEO 4 16
Officer/Executive 4 16
Volume : 3 | Issue : 3 | March 2014 ISSN - 2250-1991

As listed in Table 8.1, 8 of the respondents that answered the 20 to 50 employee 10 40

questionnaire are Supervisors or at the Managerial level and
represent 32% from the total respondents. 9 respondents are More than 50 employee 15 60
Senior Managers or Vice President, which form 36% of the It can be seen in Table 8.5 that 60% of the respondents came
total number of respondents. This is considered good because from medium and large sized organization employing more
of the position of respondents in that group surely has been in than 50, while the remaining 40% represent the small sized
touch with hands on experience at the decision making level organization that employs 20 to 50 people. Looking at results,
within the organization as well as incorporating the risk man- it shows that most of the respondents are working in large
agement policy implemented by their organization. The expe- sized organization and most of them have adequate knowl-
rience in them and will give a better understanding of the risk edge on the subject of the study. This situation had support
management practice in the manufacturing industry hence, re- confidence in the data obtained through the questionnaire.
sulting accurate answers in the questionnaires. General Manag-
ers or CEOs and Officers or Executives shares the same percent- Companies Involvement in the Industry
age that is 16% respectively from the total respondents. TABLE 8.6 THE PERCENTAGE OF YEARS IN THE COMPANY
Years Number of Respondents Percentage (%)
Years in the company
TABLE 8.2 THE PERCENTAGE YEARS IN THE COMPANY 1 - 5 years 2 8
6 - 20 years 17 68
Age Number of Percentage (%) More than 20 6
(Years Old) Respondents years 24
0 - 5 years 1 4 From Table 8.6, 68% of the respondents have 6-20 years of
5 - 10 years 6 24 experience with the industry. This is a good percentage be-
10 - 15 years 9 36 cause, with the experience in them and will give them better
15 - 20 years 5 20 understanding in corporate real estate as well as risk manage-
ment in the manufacturing industry and will give accurate an-
More than 20 4 16 swers in the questionnaires.
years
As for the “years of service” in the company, majority of the re- SECTION 2: ANALYSIS OF FEEDBACK ON THE RISK MAN-
spondents are from the 10 to 15 years of service (at 36%). This AGEMENT PRACTICE
is considered good because of the respondents in that age group The discussion and analysis done in this section makes use
surely has been in the industry for some time. There is experience of the statistical data obtained from SPSS analysis. The two
in them and will give them better understanding in corporate real tables give the “mean average” and “standard deviation”
estate as well as risk management in the manufacturing industry which form the basis for the discussion here.
and will give accurate answers in the questionnaires.
The questions were designed to understand the risk manage-
Education Level ment practice that was formulated from the extensive literature
TABLE 8.3 THE PERCENTAGE OF LEVEL OF EDUCATION OF reviews on the previous chapter. The feedback was done by
RESPONDENT asking the respondents to answer the questions by selecting a
Level of Education Number of Respondents Percentage (%) Likert-type answers which range from “Strongly Disagree” to
“Strongly Agree”. The scale was ranged from 1 to 5 with 1 be-
SPM/STPM 0 0 ing “Strongly Disagree” and 5 being “Strongly Agree”.
Diploma 3 12
Degree 18 72 TABLE 8.7 THE RISK MANAGEMENT PRACTICE DESCRIP-
Masters 4 16 TIVE STATISTICS
PhD 0 0 Description N Mean Std.
Deviation
Others 0 0
There is a formal organized Risk 25 4.2400 .77889
From Table 8.3, it shows that the minimum level of education Management unit in my organization.
among respondent is diploma with 12% and the no of re- The responsibility for risk
spondent with the highest level of education which is Masters management is documented 25 4.0800 .70238
is 16%. 72% of the respondent holds a degree. and understood throughout the
organization?
Functions in Company Your organization develops and
review risk mitigation strategies 25 4.4800 .50990
TABLE 8.4 BREAKDOWN OF RESPONDENTS BY FUNCTIONS continuously.
IN COMPANY Your organization monitors, review
and report on risk evaluation. 25 4.4000 .50000
Division in Company Number of Percentage (%)
Respondents Monitoring the effectiveness of risk
management is an integral part of 25 4.4400 .50662
Marketing/operations 8 32 routine management reporting.
Facilities/Real Estate 7 28 Your organization has a proper risk
treatment (action) plan? 25 4.3600 .70000
Corporate Affairs/Planting 7 28
Your organization carries out a
General Admin/Others 3 12 comprehensive and systematic
The respondents are evenly spread throughout the whole or- identification of its risks relating 25 4.3600 .48990
to each of its declared aims and
ganization in terms of their division and department. 32% objectives.
of the total respondents are from marketing and operation Risk management strategies
which is considered good because in manufacturing industries compliment the corporate risk profile. 25 4.5200 .65320
these are the key people who would have a better under- Valid N 25
standing in the risk associated with the business.
From Table 8.7, most of the standard deviation is above 0.5, only
Size of operation one question falls below 0.5 with 0.4899. The overall mean is
Table 8.5 Size of Respondents’ Office close to 4.5, this means that on average all the respondents agree
with the study’s formulation of the risk management practice in an
Division in Company Number of Percentage (%)
Respondents organization. Majority think that risk management strategies com-
pliment the corporate risk profile (which is reflected in the “mean”
Less than 20 employee 0 0 being at 4.52). Overall, with majority standard deviation being

3 | PARIPEX - INDIAN JOURNAL OF RESEARCH

Volume : 3 | Issue : 3 | March 2014 ISSN - 2250-1991

more than 0.5, and the “Average Mean” being a 4.5, we can say For development risk strategies the most applicable strategies is
that in general all the role of CRE as listed in the questionnaire fall due diligence with mean of 4.52. The least applicable strategy
within the expectations of the survey participants. is hedging with 4.00 mean. Insurance were considered as the
most important strategy to face financial risk with a score mean
SECTION 3: ANALYSIS OF FEEDBACK ON IDENTIFYING of 4.60. To mitigate physical risk due diligence once again is the
CORPORATE REAL ESTATE RISK most applicable strategy compared to diversification. Due dili-
Similar to the above section, the analysis and discussion here gence received a mean score of 4.80 as for regulatory risk.
are based solely on the analysis done using SPSS.
Analysis of Feedback on measuring the CRE risk management
TABLE 8.8 IDENTIFYING CORPORATE REAL ESTATE RISK in Company’s Performance This section analyse the feedback
DESCRIPTIVE STATISTICS for CRE Performance Measurement basing on the statistical
Std. data obtained from SPSS.
Category Type N Mean Deviation
Design Risk 25 3.9600 .78951 TABLE 8.10 MEASURING THE CRE RISK MANAGEMENT IN
Construction COMPANY’S PERFORMANCE
Risk 25 4.6000 .50000
DESCRIPTIVE STATISTICS
Development Financing Risk 25 4.0400 .73485
Risk Description N Mean Std. Deviation
Property
management 25 3.0000 .86603 Risk Management is recognized as 25 3.6800 1.06927
risk a key unit in your organization.
Reversion risk 25 2.0400 .84063 The contributions of Risk
Leasing Risk 25 3.4400 .96090 Management in CRE have resulted 25 4.5600 .58310
in substantial savings to the
Default Risk 25 4.4400 .76811 organization.
Property Risk Management strategies have
Financial Risk management 25 2.9200 .86217 managed to bring about great
risk improvement to organization 25 4.4000 .50000
Liquidity risk 25 3.7600 .96954 performance.
Reversion risk 25 4.0400 .67577 The contribution of Risk
Design risk 25 4.2000 .91287 Management has met the 25 4.3600 .86023
Physical Risk company’s overall objective of
Location risk 25 3.9200 .86217 maximizing returns
Environmental 25 3.9600 .67577 Due to Risk Management
risk strategies, the company has
Regulatory Risk
Land regulation 25 4.0800 .81240 come up with defensive plan to 25 4.4000 .50000
risk reduce vulnerability to economic
Valid N 25 environment/
From Table 8.8, the standard deviations to all the questions are Effective and strategic risk
less than 1.0 with the narrowest being at 0.500 and the widest management can improve the 25 4.2400 .43589
company performance.
at 0.96954. This means that, overall, the survey participants do
Risk Management awareness level
not seem to differ very much in their perception of the type of risk within the organization affects the 25 3.9200 1.03763
as listed in the survey among them. For development risk, con- company performance
struction risk is deemed as the biggest threat to most companies. In general, Risk Management in
Default risk on the other hand is the major concern for financing CRE is crucial to the company’s 25 3.7600 1.09087
which is followed closely by reversion risk. Design risk came up success.
above location risk in physical category while land regulation risk Valid N 25
seems to be the major concern in regulatory department. From Table 8.10, three questions have a standard deviation of
more than 1.0 while the rest are all less than 1.0. This shows
SECTION 4: ANALYSIS OF FEEDBACK ON IDENTIFYING THE that, overall, there seem to be some element of uncertainty
APPLICATION OF CRE RISK MANAGEMENT STRATEGIES among the survey participants on these questions. With the
This section analyzes the feedback for CRE risk management “mean average” of 4.165, we can say that the list of perfor-
strategies application in an organization basing on the statisti- mance questionnaire as listed in this section fall “within” the
cal data obtained from SPSS. expectations of all the participants. Participants agree that CRE
risk management helps improve companies’ performance.
TABLE 8.9 IDENTIFYING THE APPLICATION OF CRE RISK
MANAGEMENT STRATEGIES SECTION 5: MEASURING COMPANIES PERFORMANCE US-
DESCRIPTIVE STATISTICS ING EVA
Std. To measure the companies’ performance, the EVA method has
Category Type N Mean Deviation been adopted. Only 7 companies out of the 25 respondents
Hedging 25 4.0000 .95743 performance were selected to be measured because they were
Development Avoidance listed in the Bursa Malaysia, hence financial performance were
Risk 25 4.4000 .64550 able to be conducted with the availability of annual report
Due diligence 25 4.5200 .58595 that contains financial statements.
Insurance 25 4.4400 .71181
Hedging 25 4.2400 .66332 TABLE 8.11 COMPANIES EVA
Financial Risk Avoidance 25 4.2400 .72342 2006 2007 2008
Due diligence 25 4.2800 .73711
Insurance 25 4.6000 .50000 Engkah 2,481,426 4,132,276 (4,228,922)
Physical Risk Due diligence 25 4.5600 .50662 TopGlove 63,247,270 11,226,720 (3,902,570)
Diversification 25 4.3200 .47610 Ajiya (1,244,717) (10,143,884) 3,936,519
Regulatory Risk Due diligence 25 4.8000 .40825
Valid N 25 KBB 60,090,930 28,274,365 12,342,348
SilverBird (3,576,602) 3,737,887 (33,262,427)
From Table 8.9, the standard deviations to all the questions Prestar 27,494,082 1,271,062 (63,012,136)
are less than 1.0 with the narrowest being at 0.40825 and the Table 8.11 shows the EVA for each company for 3 consecutive
widest at 0.95743. This means that, overall, the survey partic- years. The EVA is calculated as the difference between the Net
ipants do not seem to differ very much in their perception of Operating Profit after Tax and the opportunity cost of invested
the type of risk as listed in the survey among them. Capital.

4 | PARIPEX - INDIAN JOURNAL OF RESEARCH

Volume : 3 | Issue : 3 | March 2014
Figure 8.1: EVA Performance Chart
From the figure above we can see that all companies where
performing well during 2006. For the year 2007 the perfor-
mance pattern declines but mostly still maintain a positive
EVA. Most companies were not performing well in year 2008.
Only 2 companies managed to show an increase in EVA. The
reason for the 2008 phenomenon are most likely due to the
global economic recession and oil hike in our country that also
have affected the manufacturing industries. In summary, con-
stant positive EVA values over time will increase company val-
ue, while negative EVA implies value depreciation.
Establishing Correlation - CRE Risk Management strategies
andcompanies’ performance For the purpose of establish-
ing the correlation between CRE risk management strategies
and companies performance, all the results from the respond-
ents have been analyzed using the SPSS programme to get
the strategies application mean. This figure is then correlated
with the findings of EVA using Microsoft Excel. However, to
establish the correlation, only EVA in year 2007 is correlated
because most of the EVA performance was not stable in year
2008 due to the abovementioned reasons.
TABLE 8.12 CORRELATION BETWEEN CRE RISK MANAGE-
MENT STRATEGIES AND COMPANIES’ PERFORMANCE
Mean Strategy EVA
Mean Strategy 1 • Selection of appropriate CRE assets given corporate pro-
EVA 0.572512715 1
From the above analysis we can summarize that risk manage-
ment strategies and companies’ performance have a strong
positive correlation. High application of risk management
strategies can increase the companies’ performance. This re-
sults in consistent with findings from questionnaires where
respondents agree that CRE risk management helps improve
companies’ performance.
CONCLUSIONS
This research study is an attempt to look into CRE risk man-
agement in the manufacturing industries in Malaysia where
identifying types of risk and risk management strategy are
ISSN - 2250-1991
the main focus. At the moment, the research study about
CRE risk management is not so rigorous yet in Malaysia. Risk
management on its own is regarded as an important feature
in the manufacturing corporate strategic planning. Most of
the companies are well aware of the importance and provide
allocation for risk management team within their organiza-
tions. One of the reasons more attention has been given to
risk management is the Bursa Malaysia has made risk manage-
ment as one of the requirements for public listed companies
This level of awareness can well be increased Having said that,
the companies also agrees that corporate real estate risk man-
agement helps to improve companies ‘performance.
Risk management cannot be a one-off stand-alone task that
can be managed by top management and implemented by a
few specialists. Many risks, such as operational risks, are un-
predictable and can arise any time anywhere in the organi-
zation, and this means that all personnel must be aware and
committed. Education and training of corporate real estate
managers of the importance of risk management in necessary
to increase CRE risk management awareness. Top manage-
ment forgets or do not know that successful corporate real
estate managers need to be educated and trained. They will
have to undergo formal education and training in the area of
real estate. In Malaysia, the education and training for real es-
tate managers is the same as of a valuer. It is important that
suitably and adequately trained professionals are recruited and
trained to manage the corporate real estates.
Risk management must be a necessary part of CRE manage-
ment process. Therefore CRE risk management strategies must
be integrated within the overall corporate risk profile and cor-
porate management must work with CRE management to
integrate risk management into the firm’s overall mission and
risk preference profile.
A set of CRE risk management guidelines can be developed
to correctly assess the contributing risk of CRE assets. These
operational guidelines should include:
• Coordination of CRE risk management strategies with cor-
porate strategies and corporate mission
• Development of CRE risk management strategies that com-
pliment the corporate risk preference profile
duction needs and risk preference profile
• Implementation of appropriate CRE risk management strat-
egies beginning with due-diligence and including avoid-
ance, insurance, hedging as well as diversification as re-
quired.
Finally the CRE risk management must continuously update
risk management strategies as the corporate mission and risk
preference profile develops.
5 | PARIPEX - INDIAN JOURNAL OF RESEARCH
Volume : 3 | Issue : 3 | March 2014 ISSN - 2250-1991

REFERENCES

Adair, A. & Hutchison, N. (2005), the reporting of risk in real estate appraisal property risk scoring, Journal of Property Investment & Finance, Volume: 23, Number: 3, pp:
254-268 | Baird, Inga Skromme and Howard Thomas, 1985.”Toward a Contingency Model of Strategic Risk Taking,” Academy of Science Review, 10, 2: 230-243. | Bajaj,D
2001. Corporate Risk Assessment in the Construction Industry: An Australian Perspective, 2001 AACE Transactions, Morgantown, WV: AACE. | Barton, Thomas L., William
G. Shenkir and Paul L. Walker. 2002. “Managing Risk: An Enterprise Approach,” Financial Executive, March/April 2002. Barton, et al (2002) | Basel Committee on Banking
Supervision (2003), “Advanced measurement approaches for operational risk: supervisory expectations”, Basel Committee on Banking Supervision | Bhimani, A. (1993),
Performance measures in UK manufacturing companies: the state of play, Journal of Management Accounting | Bon Ranko, McMahan JF and Carder P(1195)Bon, McMahan
& Carder (1994) Property Measurement: from Theory to Management Practice Facilities Volume 16 Number 7/8 pg 208-214 | Hertz, D.B., Thomas, H. (1994), Risk Analysis
and its Applications, John Wiley & Sons, Detroit, MI, | Christensen, Clayton (2001) the Past and Future of Competitive Strategy, MIT Sloan Management Review, winter
2001, pp 105-109. | Committee of Sponsoring Organisations (2004), “Enterprise risk management framework”, Committee of Sponsoring Organisations of the Treadway
Commission, American Institute of Certified Public Accountants | European Foundation for Quality Management (2005), EFQM Framework for Risk Management, European
Foundation for Quality Management, Brussels | Fisher, J. (1992), Use of non-financial performance measures. Journal of Cost Management, 6(2), pp. 31-8. | Fisher. J, (1992),
Non-financial performance measures: Another key to strategically adapted cost management, Journal of Cost Management. | Gibson, V. &Louargand, M. (2002), Corpo-
rate Real Estate Portfolio Risk Management and the Corporate Real Estate Portfolio American Real Estate Society Annual Meeting | Hiang, L.K &Ooi J.T.L. (2000), Current
issues in strategic corporate real estate asset analysis and management, Journal of Corporate Real Estate, Vol. 2 No. 3, 2000, pp. 240–249. | Hillson, D. (2003), Using a
Risk Breakdown Structure in project management, Journal of Facilities Management, Vol. 2, No.1, pp.85–97 | Huffman, F.E (2002), Corporate Real Estate Management and
Assessment, Journal of Corporate Real Estate,Volume 5, Number 1, pp. 31-41. | Huffman, F.E (2004), The Quantification of Corporate Real Estate Risk, Real Estate Issues,
Summer 2004, pp10-16. | Institute of Chartered Accountants in England and Wales (ICAEW, 2000) ICAEW (2000), Risk Management and the Value Added by Internal
Audit, Institute of Chartered | Accountants in England and Wales Audit Facility, London, . | Jaafari, A. (2001), “Management of risks, uncertainties and opportunities on
projects: time for a fundamental shift”, International Journal of Project Management, Vol. 19 pp.89-101. | Jusoh, R. (2003), Performance measurement for an organization:
A guide, The Malaysian Accountant | Kaplan, R. S. & Norton, D. P. (1996), Using the balanced scorecard as a strategic management system, Harvard Business Review,
vol. 74, pp. 75-85. | Krumm P. J.M.M., Dewulf, G. & de Jonge H. (1998), Managing key resources and capabilities: pinpointing the added value of corporate real estate
management Journal: FacilitiesVolume: 16Number: 12/13Year: 1998pp: 372-379 | Krumm J.M.M.P. (2001) History of real estate management from a corporate perspective
Journal: Facilities Volume: 19 Number: 7/8 pp: 276-286 | LubkaTchankova, Risk identification – basic stage in risk management: Volume: 13Number: 3Year: 2002pp: 290-
297 | Lopes J.L.R (1995), A meta-model for corporate real estate management, Journal of Property Management, Volume 13, Number 4, pp. 29–35 | Lopes, J.L.R. (1996),
Corporate real estate management features, Journal of Facilities, Volume 14, Number 7/8, pp. 6–11 | Louargand, M. (2002), Risk Management and the Corporate Real
Estate Portfolio, American Real Estate Society Annual Meeting | Lubka, T. (2002) Risk identification - basic stage in risk management, Journal Environmental Management
and Health Volume: 13Number: 3Year: 2002 pp: 290-297 | Manning, C. &Roulac S.E. (1999), Corporate Real Estate Research, Journal of Real Estate Research, Vol. 17, No.
3, pp. 266-278 | Meyer, W. (1996), Pitfalls in choosing non-financial measures, Financial Times, Issue 1. | Mills, A. (2001) A systematic approach to risk management for
construction,Journal: Structural Survey Volume: 19 Number: 5 Year: pp: 245-252 | Miles, F.M., Wilson, T.G. (1998), “Managing project risk and the performance envelope”,
Proceedings of the 13th Annual Applied Power Electronics Conference and Exposition, APEC, Singapore, February 15-19 | Mullins, J.W., Forlani, D., Walker, O.C. (1999),
“Effects of organizational and decision-maker factors on new product risk taking”, Journal of Product Innovation Management, Vol. 16 pp.282-94. | Msezana, T. & McBride,
J. (2002), Corporate Real Estate and Business Continuity: An integrated enterprise conceptualization, Journal of Corporate Real Estate, Volume 4, Issue 4, pp 348 – 357.
| Olsson, R. (2008), Risk management in a multi-project environment: An approach to manage portfolio risks, International Journal of Quality & Reliability Management,
Vol. 25 No. 1, pp. 60-71 | Peter J.M.M. Krumm. (2001), History of real estate management from a corporate perspective, Journal of Facilities, Volume 19, Number 7/8, pp.
276-286 | Ranko, B.J & McMahan P.C.F, (1998), Property performance measurement: from theory to management practice, Journal of Facilities, Volume 16, Number 7/8,
pp. 208–214 | Stivers, P. &Covince, J. (2002), How non-financial performance measures are used, The CPA Journal. | Varcoe, B. (2001), The performance measurement of
corporate real estate portfolio management, Journal of Facilities Management, Vol. 1, No.2, pp. 11 7–130 | UK Institute of Internal Auditors IIA (2004) The role of internal
audit in enterprise-wide risk management, Position Statement, | Victoria Edwards, Louise Ellison (2004). Corporate property management: aligning real estate with business
strategy, Oxford UK | Williams, C.A., Smith, M.I., Young, P.C. (1998), Risk Management and Insurance, Irwin McGraw Hill. | Williams B. D (2006), Quality and risk manage-
ment: what are the key issues? Journal: The TQM Magazine, Volume: 18Number: 1, pp 67-86 | Zeckhauser, Sally and Silverman, Robert. (1981). Corporate Real Estate asset
Management. Harvard Cambridge Massachusetts |

6 | PARIPEX - INDIAN JOURNAL OF RESEARCH