We asked the witnesses how they manage the risks of moral hazard (where support for one company creates an incentive for other companies to take risks with the expectation they will also be supported) and free riders (where the company’s incumbent lenders or shareholders may benefit from government support without having to contribute themselves) when deciding if and how to intervene in a company.50 The Treasury explained how it sets “the bar very high” and conducts very detailed due diligenc...

We asked the witnesses how they manage the risks of moral hazard (where support for one company creates an incentive for other companies to take risks with the expectation they will also be supported) and free riders (where the company’s incumbent lenders or shareholders may benefit from government support without having to contribute themselves) when deciding if and how to intervene in a company.50 The Treasury explained how it sets “the bar very high” and conducts very detailed due diligence on the companies, 42 C&AG’s Report, para 1.4, Figure 4 43 Q15 44 C&AG’s Report, paras 3.3, 3.5 45 Q22 46 C&AG’s Report, Lessons learned: tackling fraud Type: conclusion | Number: 19 | Response status: accepted Government response: 4.1 The government agrees with the Committee’s recommendation. Target implementation date: July 2024 4.2 The Accounting Officers’ (AO) Assessments Guidance and Survival Guide provide advice on AO responsibilities. Managing Public Money provides complementary informati