Corporate Governance Roles and Responsibilities Flashcards

Corporate governance provides the essential top-down monitoring and management of risk within an organization.
Both corporate governance and risk management are centered on strategy and supporting the strategic direction of the entity.
The board of directors is responsible for risk management oversight, working with management to define the organization's strategy and ensure risk mitigation occurs.
Strong corporate governance aids in goal attainment and the creation of an organizational culture that encourages appropriate behavior.

In 2008, the New York Stock Exchange created the Commission Governance in response to the financial crisis and scandals such as Enron.
The commission emphasized that boards should guide long-term growth, eliminate policies promoting excessive risk-taking, and ensure risk management systems are active.
Board members must maintain independence and objectivity to act in the best interest of stakeholders.
Key board duties include guiding corporate strategy, overseeing the integrity of financial reporting, and conducting annual risk assessments.

Corporate culture is a primary factor in integrating risk management into the values of an organization.
The development of culture begins with the board, which establishes the tone at the top.
Every entity should implement a code of ethics that is approved and reviewed annually by the board.
Management is responsible for communicating the code and providing necessary training globally across the organization.
Effective implementation of a code of ethics and a whistleblower program strengthens entity-level financial control.

Board of Directors: Provides oversight on Enterprise Risk Management (ERM) by reviewing the entity's portfolio view of risk against its defined risk appetite.
Chief Executive Officer (CEO): Holds ultimate responsibility for ERM, ensuring the development of a comprehensive program and setting the internal tone for risk awareness.
Management: Directly responsible for all entity activities and managing risks within specific business units or departments.
Risk Officer: Tasks include establishing ERM policies, framing authority for business units, and creating a common risk management language.
Internal Audit: Strengthens capability by auditing the risk management process and providing training and education throughout the organization.