OECD report - corporate governance lessons from the financial crisis

It is turning into a month for reports. The OECD has published a report titled Corporate Governance Lessons from the Financial Crisis. This examines governance issues across countries, drawing upon company investigations, parliamentary enquiries and other regulatory reports. The report concludes:

... the financial crisis can be to an important extent attributed to failures and weaknesses in corporate governance arrangements. When they were put to a test, corporate governance routines did not serve their purpose to safeguard against excessive risk taking in a number of financial services companies. A number of weaknesses have been apparent. The risk management systems have failed in many cases due to corporate governance procedures rather than the inadequacy of computer models alone ... In other cases, boards had approved strategy but then did not establish suitable metrics to monitor its implementation ... Accounting standards and regulatory requirements have also proved insufficient in some areas ... Last but not least, remuneration systems have in a number of cases not been closely related to the strategy and risk appetite of the company and its longer term interests".