The prominence of the role of The Board of Directors on the significance of Risk Management Strategy

Abstract

Abstract

 In the wake of the Enron company collapse and others such as JP Morgan struggling to maintain their financial status after massive losses during the global financial crisis, it revealed more about the need to increase the roles played by “The Board” in risk management. There is a need for a risk management committee to be established who can work together to manage potential risks in a company. The study has investigated various literature researches conducted, which reveals that “The Board” roles should be increased.  The study was mainly motivated by the poor performance of different corporations; however, it settled on two significant cases of Enron, which ended up collapsing, and JP Morgan, which lost billions of dollars because their “The Board” roles were not properly defined. At the same time, Woolworth failed because of lack of poor management of the company’s operations. The study has used the qualitative framework to explain the relationship between the firm’s ability to manage risks and the increased roles of “The Board”. The study results found that corporate governance is essential as the roles of “The Board” are increased. This is necessary to determine how “The Board” would perform their functions to improve the company's performance.  Two hypotheses were developed in this research, and they all turned out to be true and applicable by the study results.