The role of a board’s corporate governance requires oversight, understanding, and foresight. Board directors need to be more vigilant and make informed decisions as the business environment gets more complicated and volatile. It also requires coordinated efforts by all employees to ensure success.
A well-formed board should comprise members who have a wide range of expertise and perspectives, who are willing to challenge the board’s assumptions and views. This will lead to more thorough discussions and improve the overall effectiveness of the board.
As the responsibilities of the board continue to change, it is important to be prepared to tackle the new technologies and issues such as disclosures about climate and diversity which could affect a company’s bottom line. It’s also crucial to establish an environment that promotes and encourages ongoing education, and penalizes complacency.
The board should set strategic goals and objectives for the near and long-term and put mechanisms in place to monitor progress towards these goals. The board also oversees the chief executive officer and determines the guidelines and policies which govern the company’s activities.
It’s the board’s responsibility to determine what risks are acceptable and how to manage them while protecting shareholder interests. The board should conduct risk assessments, develop guidelines for their own actions and the management’s actions and implement accountability systems to fulfill its stewardship responsibility.