Corporate governance is the process of creating rules, policies and controls and resolutions to promote positive corporate culture and conduct. It also helps protect organizations from business risks and crisis like corruption of leadership and cybersecurity threats. It also has contingency plans that assist companies in dealing with these forces of business and come out the other side stronger and more resilient.
Corporate governance structures and practices differ according to the size of the business and industry, its ownership structure and the jurisdiction. These governance structures and practices, despite their differing must all share the same objective: to create long-term value for shareholders. They should also allow for flexibility to change and adapt their governance practices as necessary in order to achieve this goal.
The board of directors of a company is accountable for establishing goals for the company’s strategic direction, appointing senior management and monitoring them, and representing shareholders’ interests. Board members must be aware of their responsibilities, and work with management to carry out their duties in a manner that is supportive of the development of the business as well as financial performance.
Stakeholders should be encouraged engage in shareholder outreach as well as dialogue with the board and management of an organization. They will be able to speak out in areas which were previously the responsibility of the board and the management, such as strategic direction and decisions. When doing this it is vital for the board and management to be honest and transparent with their stakeholders about their governance structures and practices and their reasons for using them.