Taking risks is a fundamental driving force in business and entrepreneurship. To reap the full rewards of risk-taking, however, firms need to have in place effective risk management practices. The effective implementation of corporate governance standards like the OECD Guidelines on Corporate Governance of State-Owned Enterprises (hereinafter “SOE Guidelines”) should ensure that risks are understood, managed, and, when appropriate, communicated.

Taking risks is a fundamental driving force in business and entrepreneurship. To reap the full rewards of risk-taking, however, firms need to have in place effective risk management practices. According to a 2014 peer review of risk management corporate governance practices conducted by the OECD Corporate Governance Committee however, many firms continue to underestimate the cost of risk management failures. These costs may be greater in state-owned enterprises (SOEs), where the two main disciplining factors bearing on private firms – the risks of bankruptcy or hostile takeovers – are weaker or non-existent. In addition, public ownership may raise additional concerns about the degree of oversight, at the level of general government, over the actual and contingent liabilities vis-à-vis corporate risk management practices.

This section provides an overview of the framework under which state-owned enterprises (SOEs) operate in the 33 countries contributing to this stocktaking report. As per the OECD Guidelines on Corporate Governance of State-Owned Enterprises, it also assesses the extent to which commercially oriented SOEs are expected to follow similar riskmanagement rules as private sector companies in similar situations.

This section provides an overview of risk management rules and regulations applicable at the level of the state-owned enterprise (SOE), and how these rules are applied in practice. It includes, in particular, a focus on the role of SOE boards in overseeing how their SOEs identify and manage risk in their business operations, as well as practices for identifying and reporting risk to the board.

This section provides an overview of risk management practices employed by state-owned enterprises' (SOEs) government owners. This includes discussion of the state’s determination and communication of its risk tolerance levels, the extent to which the state as shareholder reviews SOEs’ risk management systems, and finally, the role of state audit institutions in the oversight of risk management in the SOE sector.