Some of the key lessons of the financial crises are also useful to understand key recommendations for protecting stockholder investments. OECD reports identify some of the key areas of reforms. 1) Better guidance for banks when it came to strengthening its risk management practices with respect to acquisition of banking products and portfolios. These included better guidance to strengthen a bank’s risk management practices. As seen from the Insider movie and also from existing secondary research evidences, financial institutions should be more careful when it comes to guarding their stockholder interests in the context of known risks
2) In the movie the insider, it is stated by Greenspan that while they are right 70 percent of the time, there is a 30 percent when they could be wrong. If such is the case, then it is necessary to have a risk management model that also aims to handle unforeseen risks. In an industry that is constantly being researched on with multiple economic researchers and guides presenting their viewpoints, unforeseen risks should not happen, but still there must be some risk management model to help here.
3) In the context of remuneration structures, it is seen that researchers point out why it is necessary to have a structure that taken into interests the other stakeholders of company. A compensation structure that is built on excessive risk taking must be avoided. Short term returns must not be an issue to stockholder interests. As Lang (2010) stated, the remuneration system is what motivated the excessive risk taking behaviour and where managers got rewarded on account of the designations alone even when they were wrong or had failed in a financial year this led to issues for the company. Remuneration structure of the company must be linked to long term performance and financial sustainability of the company. Risk appetite must be controlled by internal risk controls and other risk management controls as well.
4) The state of governance has to be improved and this is the final major recommendation that could be made here. The state of governance has been an issue as was discussed in the subsection on the failure of the governance structure. So it is critical that the governance structure be revised and strict compliance from director to employee must be targeted to help protect stockholder interests.