The Investor Perspective on Risk Culture

Peter Montagnon

This chapter looks at the role of shareholders in contributing to risk management and oversight. It begins by considering the overall attitude of investors in terms of time horizons and investment approach, noting that shareholders are not a homogeneous group. While there are many, often egged on by sell-side analysis, who seek short-term returns and encourage leverage, there is also a substantial body that takes a long-term view and would prefer to engage. This community has developed a clear understanding of what to expect from companies in terms of risk management and oversight, as exemplified in the work of the International Corporate Governance Network (ICGN) and the Financial Reporting Council (FRC). The chapter examines these conclusions, before moving on to consider shareholder expectations of company reporting and the impact of the UK Stewardship Code. It concludes that, while shareholders will not be a first line of defence in risk management and oversight, they can make an important contribution and should be encouraged to do so.


Rightly or wrongly, a substantial portion of blame for the 2007–08 financial crisis was

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