The Malaysian listed companies are still struggling to maintain their enterprise risk management(ERM) system efficiently due to improper implementation problems of risk management practices.Therefore, the prime objective of this study is to reveal the audit effectiveness in mitigation of riskmanagement implementation (RMI) problem and to examine the effect on financial performance.To achieve this objective, three hundred (300) questionnaires were distributed among themanagerial employees of Malaysia listed firms by using simple random sampling. Data wereanalyzed by using SmartPLS 3. It is found that external audit effectiveness (EAE) and internal auditeffectiveness (IAE) has a significant positive relationship with an ERM system. However, topmanagement stress has a significant negative relationship with RMI. Additionally, ERM system haspositive effect on financial performance of companies.It is also found that level of RMI playing amediating role. Thus, this study is contributed in the body of knowledge by highlighting the vitalfactors to mitigate the crucial problem of RMI, particularly in Malaysian firms. Hence, the currentstudy is quite beneficial for practitioners to implement ERM system effectively.
Keywords: Enterprise risk management, internal audit, external audit, top management stress,implementation.