E&M

Risk management represents a core component of corporate governance and requires governance mechanisms that are aligned with the firm’s strategic priorities. This article examines the role of the Board of Directors in defining risk capacity, risk appetite, and risk tolerance. To bridge theory and practice, we explore internationalization as a strategic decision that substantially affects a company’s risk profile. An empirical analysis of 4,723 Italian companies and 10,459 foreign direct investments shows that greater governance maturity is associated with lower exposure to high-risk countries, ceteris paribus.