What governance failure occurred when a board approves strategic partnerships without due diligence?

• A. Inadequate risk assessment.
• B. Lax vendor management.
• C. Improper governance.
• D. Lack of board oversight.

Answer: (A)

Evaluating strategic partnerships requires a thorough risk assessment before any commitment. Approving a deal without due diligence means key risk factors—financial stability, legal and regulatory implications, strategic fit, operational integration, and reputational exposure—are not identified or quantified. Without this risk analysis, the organization makes decisions on uncertain grounds, which is exactly why inadequate risk assessment is the correct description of the governance failure. Lax vendor management focuses on post-deal controls, improper governance is too broad a label for the specific lapse, and lack of board oversight would imply the board failed to oversee decisions in general, not the failure to perform the necessary risk evaluation before approval.