The Moral Risk in Enterprise Management:Economic Perspective

Moral risk refers to immoral acts that are performed by a man of business,under the intrinsic motivation,to a client when information is asymmetric so as to maximize personal interests.Because of the strong hidden property of this kind of behavior,the agent does not take responsibility,while it inevitably causes damaging risks or damaging consequences to the client.In nature,the risk of moral hazard is different from obvious acts of moral turpitude and blatant acts of lawlessness.However,as a matter of fact,the risk of moral hazard has as much harm on enterprise development as immoral acts of lawlessness do.To avoid the risk of moral hazard in enterprises management,we need to explore a good incentive and restraint mechanisms from the assumptions made by the economic people,and more importantly from the facts of the social people to resort to the professional staff and the professional management of enterprises.