The Impact of Operational Characteristics on the Total Risk Management: Evidence from the Industrial Firms

This paper examines the impact of the operational characteristics of the firms represented by firm size, financial leverage level, operating cash flow, and profitability on the total risks of the ASE-listed industrial public shareholding firms. The research population consists of (53) industrial firms listed on the Amman Stock Exchange (ASE), while the study sample comprises (26) firms between (2017) and (2021). Given the statistical analysis, the results show that the operational characteristics of the ASE-listed industrial public shareholding firms represented by firm size, financial leverage level, operating cash flow, and profitability affect the total risks. The findings also indicate that these four independent variables separately affect the total risks to varying degrees. The variable of the financial leverage level is ranked first in the strength of influence, while the variable of firm size is ranked last. This result can be expounded by the fact that the indebtedness in the industrial firms has a large size and thus has a greater impact on achieving the total risks of these firms. In light of these results, the officials in these firms whose shares are listed on the Amman Stock Exchange (ASE) must develop methods and tools to assess the relationship between the operational characteristics of the firms and the total risks by analyzing the ability of the firms to operate resources in operations that achieve actual cash flows exceeding the value of the cost of capital represented in stock returns and payments due for short- and long-term liabilities.