ABSTRACT
The first chapter of the book contains foundational material about risk governance, starting with an explanation of how the concept emerged and why it matters. It features an overview of the well-known cases that have been catalysts for risk governance reform, starting from the 1960s, including Three Mile Island, Chernobyl, Challenger space shuttle, Barings, Enron, the global financial crisis and Lehman Brothers, BP Deepwater Horizon, Fukushima nuclear disaster, LIBOR-rigging and Wells Fargo. The chapter argues that risk governance can be explained by three main forces:
An increasingly litigious and regulated society which led to the development of risk management as a discipline and profession, as organisations defended themselves against reputational damage, legal costs and fines;
The understanding that humans are prone to poor risk management through a range of biases and blind spots;
Incentive conflicts that cause managers, acting out of self-interest, to pay insufficient attention to longer-term risk issues that are important to most other stakeholders.
