ABSTRACT
This third chapter of the course focuses on the importance of strategy and corporate governance. Both play a very crucial role in the success of risk management. Most companies in the past have failed due to either poor strategies or not finding enough risks within their strategy. The classic examples are Kodak and Nokia, they could not see the emerging risk to change the strategy based on the emerging business model. Strategic risks are long-term in nature impacting the business model.
Similarly, risk management on its own cannot perform and be successful without solid corporate governance; risk management will just slip through the cracks of poor corporate governance. Brief cases of Yes Bank, Jet Airways, and Café Coffee Day are discussed to reinforce the importance of corporate governance. For example, when a bank disburses loans through the discussion across the table, then risk assessment cannot work. Similarly, when all the decisions are taken through a central place, the role of risk managers are very limited.
A company can survive without risk management but cannot survive without proper corporate governance. Therefore, good corporate governance is a necessary condition for risk management to be successful.
Kumar, Sonjai, Strategy and Corporate Governance for Risk Management (June 13, 2022).
First posted 2022-06-18 10:45:12
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