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    Compensation and bonus policy's impact on risk management

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    How do compensation and bonus policies impact risk management? Should stock option and bonuses be eliminated?

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    Compensation and bonus policies impact risk management from the standpoint of creating situations that induce loss. In previous years, many large companies tied company financial performance directly to compensation and bonus levels. This gives management an incentive to create fictitious financial ...

    Solution Summary

    This solution discusses how compensation and bonus policies impact risk management. Stock options and bonuses are also discussed. I explain if stock options and other forms of additional compensation should be eliminated to reduce liability.