Managing enterprise risk: why a giant failed

Purpose – This case aims to chronicle the dismantling of Tenneco – a large, prosperous diversified firm. Because it failed to manage risk, its best assets ultimately had to be sold to allow its survival. Behind its actions of problematic acquisitions and questionable financial policies, are underlying dynamics that offer lessons for other companies. Design/methodology/approach – The study is are based on extensive interviews of management, board members, and review of documents and publications. The paper focuses on decisions that cumulatively contributed to enterprise‐wide risk. Findings – The paper finds that Tenneco management's blind spot was its failure to consider the interaction of its decisions and implicit assumptions over time. Practical implications – Six principles of enterprise‐risk management are distilled from the Tenneco case. Originality/value – Although Tenneco's financial crisis occurred decades ago, the lesson for present‐day management is clear: independent board oversight is crucial. Moreover, the enterprise risks inherent in some decisions are only apparent if the board takes a system‐wide view.