Question

What were the corporate governance implications stemming from the Global Financial Crisis?

Answer 1

The global financial crisis brought the international financial system to a grinding
halt: the sudden withdrawal of global liquidity led to a catastrophic downturn in the global
economy, which was only arrested by the swift and coordinated intervention of governments
on a giant scale. The impact of the crisis has been colossal. It
causes of the global financial crisis points to regulatory weaknesses at the national and
international levels, but also to poor corporate governance practices as implicated in the risk
management standards prevailing in many large financial institutions. It is increasingly
recognized that many of these governance weaknesses also apply to other companies.
Consequently, on-going corporate governance reforms in many jurisdictions apply not only
to the financial sector but to other companies in general.
These reforms are critically important because the global economy relies upon the
stable functioning of large corporations. When governance mechanisms such as risk
management do not work properly, the impacts can be felt around the world. In nearly all
countries today ordinary people continue to experience the very real impact of the financial
crisis. Unemployment, lost savings, and financial insecurity: these are the experiences of
people who, up to now, had little or no say in how banks were governed, yet who suffer as a
consequence of corporate governance failures. The link between corporate governance and a
broader range of stakeholders has never been clearer.