Risk Management

Risk management is a critical component of corporate governance, as it involves identifying, assessing, and mitigating risks that could affect a company's operations, reputation, and financial performance. The scope of risk management has broadened significantly, encompassing not only financial risks but also operational, strategic, regulatory, and reputational risks.

In the wake of financial crises and corporate scandals, there has been an increased focus on strengthening risk management frameworks. Companies are now required to have robust internal controls and risk management systems in place. Boards of directors play a key role in overseeing these systems and ensuring that risks are appropriately managed.

The role of the risk management committee, often a subset of the board, has become increasingly important. This committee is responsible for identifying potential risks, evaluating their impact, and developing strategies to mitigate them. Companies must also consider emerging risks, such as cybersecurity threats and environmental risks, which can have significant implications for their operations and reputation.