There are many current examples of organisational failures – often with no consequences for the board of directors who are accountable to the organisation and its shareholders.  Many of these failures can be attributed to organisations appointing directors with inappropriate skills and no sense of fiduciary responsibility.  However, there are circumstances where organisations still fail despite the efforts and good intentions of its board.  Why does this happen?

In my opinion, there is too little emphasis being placed on a structured approach to governing the organisation.  The roles of the board and management are not clearly defined and as such gaps start occurring in managing the risks facing the organisation.

There needs to be a systematic process or framework in place to address risk management within the organisation.  There are so many regulations and compliance challenges facing businesses today, that without such a framework it is very easy to overlook an area of the business which requires attention.  A good governance framework embraces much more than just compliance.  It also speaks to managing the operational and strategic risks facing the organisation.

This view is shared by the CGF Research Institute (Pty) Ltd who recently developed and published a Corporate Governance Framework® which clearly defines the areas of accountability of the board and differentiates these from those areas for which management will be held responsible.  This framework presents the board with a structured approach to pro-actively managing risk within the organisation.  It provides the board with a way to map and monitor those aspects of the business which require improved governance structures and processes.

Attached please find an interesting article which elaborates on this subject.

16 April’15-Sustainability depends on strong governance framework