Acct5919

Table of Contents

1.0 Executive Summary 2

2.0 Introduction and Aims 3

3.0 Case Study 3

3.1 Facts 3

3.2 Risk Management Issue One 4

3.3 Risk Management Issue Two 7

4.0 Conclusion 9

5.0 References 12

1.0 Executive Summary

The phone hacking scandal associated with the News of the World (NoW) directly caused the closure of the 168-year-old British newspaper, and numbers of individuals were accused and affected because of this scandal. This crisis reveals the deficiency in the company’s risk management and the inappropriate of the company’s corporate governance structure. The whole case study is associated with to risk management issues, namely reputational risk and corporate government risk.

Overall, when the scandal exposed, the company performed unsatisfactory to save its reputation. At the beginning, the company just wants to cover the whole scandal by making compensation payments to victims. Since the situation gets worse, the top management just defenses themselves and makes the public really angry about this.

The reputational damage of News Corporation is expectable due to its poor corporate governance. Since such risk exists, the company can collapse at any time. The over power of Rupert Murdoch makes the company cannot always server the best interests of the shareholders. The board just pursue the welfare of themselves, instead that of the whole organization. No one dares to say no in front of Rupert, which makes the company stuck into such a dilemma.

The company can learn a lot from the crisis and a series of action plans should be implemented to address the potential risks within the organization. Rupert Murdoch should not still hold the combination position of chairman and CEO of the company. The board cannot still be packed with his family and friends. Good corporate ethics should be created to ensure the ethical behavior of its employees and a detailed reporting scheme should be put forward to ensure the board’s oversight capacity. A...