Loyola University Chicago, School of Law LAW eCommons Faculty Publications & Other Works 2008 Enterprise-Wide Risk Management and Corporate Governance. Steven A. Ramirez Loyola University Chicago,
[email protected] Follow this and additional works at: http://lawecommons.luc.edu/facpubs Part of the Business Organizations Law Commons Recommended Citation Ramirez, Steven & Betty Simkins, Enterprise-Wide Risk Management and Corporate Governance, 39 Loy. U. Chi. L. J. 571 (Spring 2008). This Article is brought to you for free and open access by LAW eCommons. It has been accepted for inclusion in Faculty Publications & Other Works by an authorized administrator of LAW eCommons. For more information, please contact
[email protected]. Enterprise-Wide Risk Management and Corporate Governance Betty Simkins* Steven A. Ramirez** I. INTRODUCTION: THE MANY FACES OF BUSINESS RISK There has always been a fundamental tension between basic corporate governance precepts and the complexity of the business of the modern public corporation. Specifically, every corporation is to be 1 managed by (or under the supervision of) the board of directors. Directors are not generally required to have any particular expertise, other than being a "natural person." 2 Yet the modem corporation may well face a myriad of risks from disparate fields of business ranging from complex financial risk3 to quality control regarding material manufactured in China.4 If the board cannot understand and manage the full breadth of risks facing the modern public corporation, then such risks may not be disclosed to investors and impounded into decisions 5 regarding the allocation of investment capital. * Betty Simkins, Ph.D., is the Williams Companies Professor of Business and Associate Professor of Finance at Oklahoma State University, Spears School of Business, Stillwater, Oklahoma.