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Risk Management and Corporate Governance
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Risk management failures at major corporations have captured the headlines for many years, primarily in the financial sector, but in other sectors as well, and have not always been the result of shortcomings in financial risk-taking. Environmental catastrophes such as Deep Water Horizon or Fukushima come to mind (or, less recently, Bhopal and Seveso), as well as accounting fraud (e.g. Olympus, Enron, WorldCom, Satyam, Parmalat), or foreign bribery (e.g. Siemens) cases, to name just a few from the non-financial sector. Often these failures were (at least) facilitated by corporate governance failures, where boards did not fully appreciate the risks that the companies were taking (if they were not engaging in reckless risk-taking themselves), and/or deficient risk management systems.
The importance of an effective risk governance framework was underlined in the Committee’s report from 2009 on The Corporate Governance Lessons from the Financial Crisis. The present review complements the Committee’s 2009/10 reviews with a survey of member and partner jurisdictions participating in the Corporate Governance Committee, with a view toward drawing lessons about the adequacy of existing corporate governance principles, guidelines, and practices in this area.
Risk governance has also been addressed in the Committee’s thematic reviews following the financial crisis, notably in the review on board practices, where the Committee examined incentives influencing corporate risk-taking, notably with regard to compensation practices (OECD, 2011). The issue has also been dealt with by the OECD’s Asian and Latin American Corporate Governance Roundtables. The Financial Stability Board (FSB), in its recently issued Thematic Review on Risk Governance, called on the OECD to review its principles for governance, taking into consideration the sound risk governance practices listed in the FSB report and reproduced in Annex A to this report (Financial Stability Board, 2013).
The present review covers 22 OECD member countries, together with Argentina; Hong Kong, China; India; Lithuania and Singapore. A general overview of risk governance practices in all participating jurisdictions is provided. A more detailed review of three jurisdictions (Norway, Singapore and Switzerland) was carried out in order to highlight either particular aspects of the risk governance framework, or country specific circumstances that may influence the choice of approach.
OECD - Personal Name
1st Edtion
978-92-64-20863-6
NONE
Risk Management and Corporate Governance
Corporate Governance
English
2014
1-100
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