The role of the board in corporate governance is to ensure that a company is legally run and in the best interest of shareholders and other stakeholders. This requires that the board function independently of management and concentrate on important issues rather than day-to-day business.
The board is responsible for the management of risk as well as the operation and strategy of a company, as well as other decisions that are reserved for it. It also chooses and supervises the performance of the CEO and the CEO succession planning process, and it establishes the company’s culture and mission.
It also supports the interests of shareholders, ensures financial data is accurately reported and ensures that investors receive all relevant information that could affect their investments. It also takes measures to safeguard the integrity and reputation of a business and avoid fraud. Directors should be urged to be educated regularly and especially on new technologies and important issues like environmental social, governance, and (ESG) or global crises that impact the way businesses are operated.
A well-formed committee structure, with a chair and secretary is essential in effective governance. It is important to promote an environment of collaboration and open communication between all committee members. The secretary of the committee will help determine the agenda, as well as take minutes of meetings and distribute them to all members of the committee.
A committee should be able to trust its advisors and their reports, advice, and opinions. It is strengthening online security with advanced cybersecurity essential that the committee comprehends who these advisors are and evaluates their qualifications.