Risk Management and Corporate Governance: The Case of Enron

28 Pages Posted: 5 Jan 2004  

Robert Rosen

University of Miami - School of Law

Abstract

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.

Keywords: corporate social responsibility, corporate governance, risk management, organizational design

JEL Classification: L2, M4, N8

Suggested Citation

Rosen, Robert, Risk Management and Corporate Governance: The Case of Enron. Connecticut Law Review, Vol. 35, No. 1157, 2003. Available at SSRN: https://ssrn.com/abstract=468168

Robert Eli Rosen (Contact Author)

University of Miami - School of Law ( email )

P.O. Box 248087
Room 370
Coral Gables, FL 33124
United States
305-284-4801 (Phone)
305-284-6506 (Fax)

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