And this is the heart of the problem: a lot of times these decisions are made by people who shouldn't be making them or they aren't made at all, they are just made by default without bring the fact that a decision is required to the level of scrutiny normally associated with such decisions.

This has killed quite a few otherwise very viable companies, it is fine to take risks as long as you do so consciously and with full approval of all stakeholders (or at least: a majority of all stakeholders). Interesting effects can result: a smaller investor may demand indemnification, then one by one the others also want that indemnification and ultimately the decision is made that the risk is unacceptable anyway (I've seen this play out), other variations are that one shareholder ends up being bought out because they have a different risk appetite than the others.