The Effect of Good Governance and Internal Control on Risk Management and its Implications on the Organizational Performance: Studies in Pension Fund in West Java-Indonesia

Abstract

One of the risks in the management of pension funds in the form of insufficient funds are available to meet the obligation to pay the rights of participants to receive pension benefits. By implementing the principles of good governance, internal control over risk management in the management of pension funds is believed to help improve organizational performance of pension funds.This study aimed to examine the effect of good governance and internal control of the implementation of risk management and its implications for organizational performance. This study measures the extent of the application of the principles of good governance and internal control in helping risk management and how much to integrate all three can improve organizational performance.The results of this study indicate that: (1) good governance does not have a significant relationship with the internal control, (2) good governance and internal control together or simultaneously and partially significant effect on risk management, and (3) good governance, control internal and risk management simultaneously and partially significant effect on the performance of the organization.This research was conducted at the Pension Fund with a Defined Benefit Pension Plan in the area of West Java, Banten. The results of this research can increase knowledge and understanding of the importance of applying the principles of good governance and internal control in managing risk and in turn resulted in increased organizational performance.