Risk is an integral part of corporate governance and should thus be analysed throughout the whole DNA-chain and nervous system of the organisation – from the letter of incorporation, through the AGM, the Board, executive management, operational management, employees and to the stakeholders they serve.
The foundation of sound risk management lies foremost with the nominating committee and the remuneration committee of the board, and not the audit committee as you first might think. The nominating committee, because it affects the composition of the board and its capacity to strategic, investigative and risk-adjusted thinking. The remuneration committee, because it sets the attitudes of management in accordance with how they are remunerated – for short-term growth and profits, or longer term value-creation? Is risk attitude part of the performance evaluation?
The full board must agree on and articulate to management the risk appetite of the organisation; and it’s also the full board that has the duty to maintain risk oversight.
This requires that the board and CEO assign clear roles and responsibilities across the organisation and exercise accountability when deviations occur.
Its important that the attitude to risk and opportunities is set as part of corporate governance, starting at board level. We can support the board and executive team with guidance and facilitated workshops and assist in discharging the board of its risk oversight duties.
We can support you with almost any aspect of risk management. Learn more.
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