Risk Analysis from a Stakeholder First Perspective

Abstract

The widely held belief that corporate executives should only prioritize shareholders’ interests is eroding. However, there are risks involved if directors of the business are asked to concentrate on broad objectives that serve the interests of all of the company’s stakeholders. Therefore, this paper focuses on the risks arising under the broad objective that company directors are required to focus on serving all stakeholders of the company, including the risk of litigation that may arise from the actions of company directors, the moral hazard of infringement of stakeholders’ interests and the creation of risks such as damage to the company’s interests, based primarily on section 172 of the Companies Act 2006 and the relevant provisions of the Insolvency Act 1986 Overall, therefore, the conclusions of this paper provide some insight into the risks arising from the view that all stakeholders are paramount.