The document discusses the severe consequences of inadequate risk management, specifically highlighting the subprime mortgage crisis driven by poor credit risk management. It emphasizes the need for organizations to identify and manage credit risk, as failures in this area can have widespread implications, including regulatory scrutiny and financial collapse. The text prompts readers to consider which stakeholders are most affected by these risk management failures.

1. Inadequate risk management practices have produced
consequences of epic proportions. The subprime meltdown in
the late 2000s was primarily driven by insufficient management
of credit risk.
Mortgage companies issued loans to individuals that lacked
sufficient means to repay the loan and/or had poor credit. The
global financial crisis brought corporate governance and
corporate risk management to the focus of regulators who
enacted more stringent guidelines.
For your discussion, think about the following:
How can organizations identify credit risk?
What is the significance of identifying and managing credit
risk?
What are the implications of a failure to properly manage this
risk?
First Post
In your opinion, which stakeholder is most adversely impacted
by the above conditions?
Employees
,
shareholders
,
debt holders
, or
society as a whole
? Be sure to explain your answer using your thoughts on the
above questions.