Risk Management in Corporate Governance: A Review and Proposal

摘要

Manuscript Type: ConceptualrnResearch Question/Issue: In this paper we identify and discuss the relationship between corporate governance and riskrnmanagement of high technology firms, with publicly listed Australian biotechnology companies as a case in point. Wernpresent a governance structure that better manages the numerous complex risks such companies face.rnResearch Findings/Insights: Audit committees are traditionally responsible for oversight of auditing matters relating to therncompany's financial systems and risk management relating to financial reporting. While the audit committee needs to haverna full understanding of the risk management system in order to be able to assess the overall risk profile of the company wernillustrate that the complex risk and regulatory environment high technology firms face may necessitate the creation of arnseparate risk management committee to interface with and assist the board and audit committee.rnTheoretical/Academic Implications: We provide evidence that the traditional governance model is inadequate in today'srncomplex business environment, particularly for high technology companies. By analyzing the legislative, industry, andrncomplex risk environment faced by these firms, we posit that the traditional model may need to change to meet the demandsrnof a wider definition of governance that specifically incorporates risk management.rnPractitioner/Policy Implications: Against a backdrop of corporate collapse, increasing corporate regulation and reporting,rnrisk management and oversight has been a recent addition to the role of the board. It is not inconceivable that capital marketrnregulators may require reporting on risk management and the creation of a separate risk management in the future.