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Enterprise risk management is the discipline that governs the integrated management of the aggregate risks for a given firm with consideration for its strategic and organizational context. The authors present, in three installments, a case study on developing and implementing a stochastic decision‐support model within an organization. This first installment describes the model.

Enterprise risk management has been defined as the strategy that aligns the firm's business with the risk factors of its environment in the pursuit of strategic objectives. Mathematical models will always be part of enterprise risk management. By means of a case study, we discuss why it is necessary to align a model with the organization in order to achieve the desired results. The structure of a model's input must fit with the structure of data collection in the firm, and the output must be consistent with the decision structure. Otherwise, data collection will not be properly taken care of and the results of a model will not find their way to where decisions are made.

The value chain of the Norwegian meat production industry has recently been through major structural changes resulting in increased flows and transportation needs at all levels. The purpose of this paper is to present results of the initial stage of a five‐year research project between the Norwegian Meat Research Centre, Norwegian meat companies and Molde University College. The main goal of the project is to develop a decision support system for the transport of live animals to a slaughterhouse to reduce transportation costs while maintaining high level of livestock welfare and meat quality, as these are three main factors for the profitability of both farmers and industry.

The paper presents a mixed integer programming model that combines vehicle routing and inventory control. We introduce the possibility for multiple routes for a given vehicle on a given day in a multiple‐period planning perspective. Arrival times of the loaded vehicles to the slaughterhouse are controlled by production (slaughter) rate and inventory level at the abattoirs so that the supply of animals for slaughter is steady and production breaks are avoided. Livestock welfare is secured by the route duration constraints.

The model has been formulated and tested on small data sets. The major future challenge is to solve real‐life problems from the involved companies.

The main limitation is the present inability to solve large cases.

The model combining transportation and inventory control in a setting of animal welfare constraints is original.

Discusses why it is necessary to align a mathematical model with the organization in order to achieve the desired results. The structure of a model's input must fit with the structure of data collection in the firm, and the output must be consistent with the decision structure. Otherwise, data collection will not be properly taken care of and the results of a model will not find their way to where decisions are made. Five years passed from the cooperation first started with the university until the model came on‐line.

Parts 1 and 2 of this series of papers discussed the stochastic programming model itself and the relationship between the model and the organization. The results are now reported.

Reports on both organizational and financial results.

Shows that, although a lot of work is needed to implement a complicated stochastic programming model within an organization, it can be done and can lead to good results. However, it takes time to adjust an organization to a new way of thinking, as a model like this can never work unless supported by upper management as well as those who use the model daily.

The main value is to demonstrate in rather large detail how a somewhat complicated model can be developed and used in an organization, which, originally, was not well aligned with the ideas of the modellers.

The relationship between the size of state audit budgets, audit responsibilities, professional characteristics of staff, risk, and tax and expenditure limitations is explored. Bivariate relationships are examined and then a model is estimated which controls for size, complexity, financial risk factors, and political risk factors. This provides a framework for considering the incremental influence of specialized audit inputs. Both "brand names" and size have been used in past research to proxy for quality dimensions intended to differentiate the audit product provided by different suppliers. This research extends such work by considering characteristics of the auditing services as reflected by specific inputs and by using cost data rather than audit fee data. The states are observed to differ in their responses to financial and political factors by spending resources on peer review, continuing professional education, certifications of professional staff, and expertise in both the computer science area and in law. A positive association of cost and auditor differentiation, implicit in past audit fee literature is corroborated.

Internal capital markets of diversified firms have been associated with inefficient allocation of investment funds across divisions, leading to value losses. Utilizing a sample of diversified firms that adopted or eliminated Residual Income (RI) plans between 1990 and 2009, we show that adoptions of these plans mitigate investment distortions and lead to value gains. Following the adoption of RI plans, diversified firms start allocating investment funds based on growth opportunities of their divisions. RI plan adopters lower their divisional investment levels, especially in segments with below-average growth opportunities. The overall investment allocation efficiency improves, and the diversification discount diminishes after the adoption of RI plans. However, RI plans appear to be used only as temporary tools for assessing corporate performance. The plans are adopted primarily by firms expected to immediately generate plan bonuses for management, and they are frequently eliminated by firms with bad accounting performance and low managerial bonuses. The study contributes to the literature on organizational efficiency, internal capital markets, and on the importance of measures based on economic profits or RI.

Public administration theory suggests that increased accountability in the public sector influences the auditor to lower materiality levels; thereby increasing the audit sample size; which decreases the likelihood of an inappropriate opinion. Accounting theory posits that engagement risk leads the auditor to lower materiality levels to decrease the likelihood of rendering an inappropriate opinion, in an effort to avoid litigation. The results of this study indicate, that in public sector entities, accountability guides the auditors’ materiality decisions.

The overall goal of science is to build a valid and reliable body of knowledge about the functioning of the world and how applying that knowledge can change it. As personnel and human resources management researchers, we aim to contribute to the respective bodies of knowledge to provide both employers and employees with a workable foundation to help with those problems they are confronted with. However, what research on research has consistently demonstrated is that the scientific endeavor possesses existential issues including a substantial lack of (a) solid theory, (b) replicability, (c) reproducibility, (d) proper and generalizable samples, (e) sufficient quality control (i.e., peer review), (f) robust and trustworthy statistical results, (g) availability of research, and (h) sufficient practical implications. In this chapter, we first sing a song of sorrow regarding the current state of the social sciences in general and personnel and human resources management specifically. Then, we investigate potential grievances that might have led to it (i.e., questionable research practices, misplaced incentives), only to end with a verse of hope by outlining an avenue for betterment (i.e., open science and policy changes at multiple levels).