Final answer:
The 2008 financial industry issues are largely attributed to poor risk management practices within financial institutions, which did not accurately assess or respond to the risks associated with mortgage-backed securities and the housing market.
Step-by-step explanation:
The problems within the finance industry in 2008 have been attributed to a breakdown in the managerial function of risk management and due diligence. Many financial institutions failed to accurately assess the risks associated with mortgage-backed securities (MBS) and the subprime mortgage market. Financial crisis unfolded as housing prices fell and defaults on loans increased, revealing that the assets backing the MBS were much less valuable than previously believed. This miscalculation, combined with an overall lack of action in addressing issues in struggling banks around the world, and particularly the failure of banks in the United States during 2008-2011, culminated in a widespread banking crisis. The failure in risk management highlights the impact of managerial decisions on the stability of financial institutions and the broader economy.