HIH Case Study

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Those responsible for the stewardship of HIH ignored the warning signs at their own, the group’s and the public’s peril. There was a lack of sceptical questioning and analysis when and where it mattered.
MONITORING & PERFORMANCE REVIEWS
There was no clear framework from which HIH’s performance could be judged. In monitoring performance, the board of HIH needed to measure management proposals by reference to endorsed strategy, with any deviation in practice being understood and challenged. The directors also had a responsibility to ensure that management proposals were being followed through. HIH 's UK operations were the subject of constant regular internal audit reports for some time. However, little was done to ensure that the proposals …show more content…

Financial risks are evident in HIH’s approach to corporate social responsibility. An ethical organisation contribute to all stakeholder’s wellbeing, with positive outcomes for its shareholders; reducing operational risk, increasing profits, leading to less disruption, fraud reduction, litigation avoidance, brand preservation, and mitigation of legal compliance penalties. Justice Owen noted that effective corporate governance should have “appropriate checks and balances in place to minimise both the risk and its effect. (Owen, 2003, p.78). Risk management was deficient with risks not being properly identified and …show more content…

The negative cash flow aspects of this venture hastened the rate of HIH’s decline and led directly to the company’s liquidation.
CONTRAVENTION OF THE LAW
Justice Owen found that specific incidents might have been a contravention of the law. The HIH Royal Commission had cited 56 possible breaches of the Corporations Act or the Crimes Act, split equally between civil and criminal offences, and recommended that the Director of Public Prosecutions or the Australian Securities and Investments Commission consider laying charges.
MORALITY, ETHICS & INTEGRITY
Those who participate in the direction and management of public companies, as well as their professional advisers, need to identify and examine what they regard as the basic moral underpinning of their system of values. They must then apply those tenets in the decision-making

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