The Essentials of Risk Management, Third Edition, 3rd Edition

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CORPORATE GOVERNANCE AND RISK MANAGEMENT

The first decade of the millennium saw two major waves of corporate failures in first the nonfinancial sector (2001–2003) and then the financial sector (2007–2009), both of which were attributed in part to failures of corporate governance. In the second decade, the world faced the sovereign debt crises in Europe in 2011 and 2012. A few years passed and the world was exposed to the COVID-19 crisis in 2020–2021 that was a major threat to businesses and financial institutions. As a result, corporate governance¹ and its relationship to risk oversight is a continuing concern around the world.

The first wave of failures included, most notoriously, the bankruptcy of energy giant Enron in 2001, a wave of “new ...