Comments for Corporate Governance & Risk Management Blog

Comment on Corporate Governance, Risk Management and Corporate Social Responsibility in Emerging Markets: A Symbiotic Relationship by Oscar Omaro

Oscar Omaro — Thu, 08 Sep 2011 02:35:52 +0000

It seems, in the end, that risk management is a fundamental driver in the development of any corporate governance policy. If the sense of risk is allayed by too-smart-by-half executives working with law firms who depend on the corporation for their income stream and reputation, then of course corporate governance is just a “book” which is there for “legal purposes” and not really meant for operating the business itself. The expenditure of resources in proper corporate governance will inevitably yield not only a return on investment, but perhaps even the difference between the corporation’s survival, and failure.

Comment on Executive Compensation: Disclosure, Advisory Votes on Pay and Source of Systemic Risk by Geld Schnell

Geld Schnell — Wed, 25 May 2011 21:00:46 +0000

Politicians say they’re beefing up our economy. Most don’t know beef from pork. ~Harold Lowman

Comment on What Boards Have Learned From the Financial Crisis by symptoms of depression

symptoms of depression — Thu, 14 Apr 2011 19:22:17 +0000

[...] What Boards Have Learned From the Financial Crisis « Corporate Governance & Risk Management Blog [...]

Comment on Corporate Governance: Are We Asking the Right Questions? by John Irvine

John Irvine — Wed, 22 Dec 2010 22:39:12 +0000

Could not agree more about the importance of risk management extending beyond share price and financial management.
Whilst our Australian economy is going well, we are very dependent on a two channel growth strategy, those being mining and tourism. Beyond these small business runs a very distant third.
The big end of town (mining conglomerates) have shown themselves to be very risk averse. An example is the proposed mining tax proposed by our previous Prime Minister, Kevin Rudd. The minute this was proposed, notification of cancellation of projects, potential job losses and economic downturn in the economy were dire predictions. Now if that is how boards and CEO’s operate in risk management, what hope for internal governance efficacy.
To me as a risk practitioner, particularly in the area of systemic risk management, minimal or little effort is dedicated to examining the real drivers of risks in an organisation. Much of the risk management is focussed on the balance sheet or output delivery or reduction in the cost per unit item.
It’s my belief that the systemic causes of poor governance in an organisation is firmly seated around risk management leadership and the ability to examine the internally generated risks within an organisation. Additionally, dedicating time to discussion of these things appears to be a low priority on the agenda of many senior executives and I daresay boards. When was the last time you heard a comment about a board or executive group dedicating a day to discuss the internally generated risks in an organisation with the objective of tackling governance issues in the organisation. There is a plethora of examples in the risk management arena to suggest that this will lead to a richer outcome to influence governance in the organisation.
As a leader in an organisation I would expect first and foremost that my board and executive would have outstanding leadership skills and the individual competencies in financial and corporate management would be secondary to this. A mentor of mine who is now a retired naval officer once told me that “successful organisations surround themselves with successful leaders” and I see plenty of evidence of that in many successful organisations across the globe. They invest in leadership, have frank and fearless discussions and the governance transparency in the organisation is obvious.
My philosophy here is
Don’t leave management of risk to middle managers
Dont rely on paper driven policy to drive effective governance
Open the doors to the executive and board and encourage transparent governance
Demand that the executive and board actively engage on governance and internally generated risks with robust discussion. Conflict can be good for the organisation.
Look seriously at the qualities of the people in the executive and ask “how much could I rely on this individual to help me lead governance in my organisation?”

Comment on Corporate Governance: Are We Asking the Right Questions? by Robin Ford

Robin Ford — Wed, 17 Nov 2010 22:43:53 +0000

I so agree, and really like the idea that the presence or absence of appropriate risk management is a good of way of judging the quality of governance. We know there is a huge risk management deficit in North America.

So many times I have seen the boxes ticked (separate CEO and Chair, majority independent directors, etc etc) only to find on further examination that the board is not remotely doing its job. A separate Chair is going to do more harm than good if he does not understand his role and cannot stand up to a dominant CEO. Independent directors are a waste of space if they do not ensure that they are adequately informed and can constructively challenge senior management. One needs to drill deeper to assess the quality of governance.