Finally (!), some excellent insights on risk management culled from the crisis. Not that populist backlash to Wall Street isn’t warranted (except when Congress grandstands), but its lack of practical content depresses me.

Besides, as MIT Sloan School of Management Professor Andrew Lo notes in this quick summary of his risk-management takeaways from the financial crisis, “the very fact that so many smart and experienced corporate leaders were all led astray suggests that the crisis can’t be blamed on the mistakes of a few greedy CEOs.”

Well, then, what is to be blamed? Outdated governance and risk management structures, thank you very much.

Lo says that many companies did a “terrible” job in assessing and managing their risk exposures. In short, he says that corporate governance – think boards – needs to be much more risk sensitive.

How might that occur? Through language and, more specifically, the language of accounting, Lo suggests. “We just don’t have the proper lexicon to have a meaningful discussion about the kinds of risks that typical corporations face today,” he says, “and we need to create a new field of ‘risk accounting’ to address this gap in GAAP.”

Happily, this need ought to fuel innovation and growth. The trillions of dollars now parked in treasury bills wants to move on to better investment opportunities. Where will it go? Lo suggests that venture capitalists ought to keep their eyes peeled for “a service like eBay that provided a price-discovery mechanism for these [potentially toxic] mortgage [securities] pools.” ###