The study examine the purpose and benefits of risk management in business organization, the
impact of effective risk management on the organization and how managers/ owners become biased
because of their private benefit from the organization. This may induce managers to misreport
information and even avoid risky project with positive NPV that can yield more profit for
shareholder to increase their value instead. The study identified factors that can possibly influence
managers’ attitude towards managing the firm’s specific risk that are within his control.
Examination of different types of managers and /owners shows that managers/and owners become
more risk taking once they observe a positive relationship between risky project and their income
and vice versa.
