Name:Aishen D.

Reyes
Chapter 6-Case Study

1. Discuss the role that AIG’s corporate culture played,if any, in its downfall.

 American International Group (AIG), which collapsed in September 2008 and

was later bailed out by the government, became one of the most contentious
figures in the 2008–2009 financial crisis due to the role that AIG's corporate
culture had in its demise. AIG's corporate culture had been involved in a high-risk,
risk-taking strategy that was backed by managers and employees and that initially
seemed to be focused on immediate financial gains. This was the key factor that
led to their defeat. Their biggest worry was an incentive structure that did little to
hold CEOs accountable for bad judgments they made. As a result, many top
executives were selected to reap substantial rewards from the company's dismal
performance and massive debt accumulation.

2. Discuss the ethical conduct of a AIG executives, and how stronger ethics program
might help the company to strengthen the ethics of its corporate culture.

 Because it entered into false reinsurance agreements with other parties in order to
boost its reserves, American International Group (AIG) lost its ability to maintain
its financial stability. The risk-taking strategy that was supported by employees
and managers at AIG who appeared intent on short-term financial gain was
known as "wine with a high waist." They acted unethically and lacked
transparency as a result. If the corporation had high ethical standards, AIG's
employees and supervisors might have prevented account inflation and phony
reinsurance transactions. They would have been less likely to take excessive risks
and more ethically irresponsible to stakeholders if they had prioritized more than
just growing sales.

3.What could AIG have done differently to prevent failure and subsequent bailout?

 During the 2008–2009 financial crisis, AIG's bankruptcy in September 2008 and
subsequent government bailout hoarding made it one of the most divisive
businesses. The division that dealt with financial products concentrated on
derivatives and other intricate financial transactions that were similar to subprime
mortgages or commodities. The division generated billions of dollars in earnings
despite the unpredictability of its commercial operations. They may have set a
threshold to decide what kind of danger was too high to take. also transparency
and responsibility.