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van Daelen, Marijn --- "Risk Management from a Business Law Perspective" [2010] ELECD 578; in van Daelen, Marijn; Van der Elst, Christoph (eds), "Risk Management and Corporate Governance" (Edward Elgar Publishing, 2010)

Book Title: Risk Management and Corporate Governance

Editor(s): van Daelen, Marijn; Van der Elst, Christoph

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781849803953

Section: Chapter 3

Section Title: Risk Management from a Business Law Perspective

Author(s): van Daelen, Marijn

Number of pages: 53

Extract:

3. Risk management from a business
law perspective
Marijn van Daelen

3.1 INTRODUCTION

In recent years lawmakers have emphasized the importance of risk man-
agement in restoring public confidence following the corporate collapses
and frauds at the beginning of this millennium and the more recent finan-
cial scandals (see Section 3.3). A short historical overview may deepen
understanding of the current corporate legal framework of risk manage-
ment. Section 3.2 will pave the way by describing the development of risk
management over time from a business law perspective, as managing risks
is part of the wider task of governing the corporation. The current legal
risk management framework is still developing. Some issues that may
prove significant for future revision of the legal framework are discussed
in Section 3.4.


3.2 HISTORICAL DEVELOPMENT OF INTERNAL
CONTROL AND RISK MANAGEMENT
PROVISIONS

This section provides a brief historical overview of the development of
internal control and risk management provisions from a corporate gov-
ernance perspective. It starts with the development of the company as a
separate legal person and reduced risks for shareholders who are pro-
tected by limited liability. It then describes the separation of ownership
and control and the legal responses to reduce information asymmetry
and mitigate poor governance. It also looks at how the responsibility and
liability of company directors for the proper performance of the duties
assigned to them came to more clearly include (in the course of the 20th
century) maintaining a system of ...