One best practice cited in corporate governance codes requires corporate leadership to anticipate and manage risks the company might face. Companies take risks to generate returns. The board is responsible for ensuring that all business risks are identified, evaluated, disclosed and managed.

The obligation to manage risk became a key issue after the 2011 earthquake and tsunami in Japan that ravaged the Fukushima Dai-Ichi nuclear station, creating a public health crisis.

Why, critics and journalists asked, did directors of the Tokyo Electric Power Company Inc. (TEPCO), the publicly traded Japanese energy company, fail to prepare adequately for risks that had been previously identified? Why weren’t there any independent board members or a risk committee? Why weren’t there appropriate policies to identify the risks and the steps for mitigating those risks should a nuclear mishap occur?

“TEPCO … couldn’t have predicted that the tsunami would hit, but it could have been better prepared for such an event to take place,” research analyst Nathanial Parish Flannery wrote, noting that outside experts had warned that the nuclear facility was at risk of being damaged even by a mid-sized tsunami.

But these criticisms and questions mostly came after the fact.

Among tools that journalists can use to assess companies are corporate governance scorecards, which try to help companies judge how well they comply with good governance principles and practices. In many countries, these scorecards are issued annually, and provide ideas for stories.

For example, a corporate governance scorecard for Vietnam in 2011, released by the World Bank’s private arm, the International Finance Corporation (IFC), urged improvement in protecting shareholders’ rights and treatment. The scorecard studied corporate governance practices at the 100 largest companies listed on the Hanoi and Ho Chi Minh City exchanges.

See a story on the scorecard at: http://bit.ly/HEcwiH

And a link to the scorecard itself: http://bit.ly/I73s2j

Codes and scorecards provide a handy checklist for journalists to determine whether companies they cover follow generally accepted best practices in their countries.

(See Story Toolbox in this chapter for story ideas based on codes and scorecards.))