Risk Management and Corporate Governance: The Case of Enron
University of Miami - School of Law
Connecticut Law Review, Vol. 35, No. 1157, 2003
Enron Board's Finance Sub-Committee's approval of the first bankrupting Raptor transaction, Talon, is examined in as much detail as published documents allow. In so doing, this article examines a failure of corporate social responsibility. As not only members of the public were harmed, but also Enron's residual owners, the shareholders, this article examines a failure of corporate governance. The examination reveals that the decision was governed by analyses of the transaction's risks. The examination also reveals that the sub-committee was presented with false risk management information. The article highlights the importance of the risk management function, especially in corporations redesigned, or re-engineered, by strategies of outsourcing and project team management.
Number of Pages in PDF File: 28
Keywords: corporate social responsibility, corporate governance, risk management, organizational design
JEL Classification: L2, M4, N8
Date posted: January 5, 2004