Corporate Governance | Assignment

Running head: CORPORATE GOVERNANCE
CORPORATE GOVERNANCE
Name of the student
Name of the university
Author note

CORPORATE GOVERNANCE1
Answer to question 1
The enterprise risk management is the procedure of organizing, planning, controlling and leading
the conduct of the institution for the purpose of reducing the impact of risk on the earning and
capitals of the organization. Historically, investment in the organized risk management system
were driven by two primary factors of risk that is management priority and regulatory
requirements. Although the enhancing program of risk management is required because of
additional pressure as protection of the market value, anticipations of counterparties as well as
associated risk.
Therefore management require to demonstrate the fair consciousness and administration
of risk. It is the duty of senior management and CEO to ascertain and manage the listed
exposure of the company to risk, the audit committee should discuss the policies and guidelines
to regulate the procedure by which this is managed. The audit committee must discuss the listed
fiscal risk exposures of the company and steps management has adopted to control and monitor
such exposures. The activities that conducted by the senior management officers in pursuance of
risk management are development of risk culture that is imperative to formulate efficient
enterprise risk management program. The other factors involves determining risk appetite,
identifying risk , performing to risk, responding to risk and also integrating ERM in decision
making.

CORPORATE GOVERNANCE2
The different methods that can be employed to address the risk involved is acceptance,
avoidance, mitigate, transfer or exploit risk. These strategies of risk management assist in dealing
with the risk of the enterprise in an efficient manner.
Answer to question 2
The remuneration plan indicates all components of packages of compensation that is
salaries, wages and benefits, the method in which it is to be paid and the purpose employee
receives salary increases, bonuses, and incentives. Staff employ incentives and remuneration to
explore the true values of the firm and the values helps in determining the behavior. Thus
remuneration can be considered as the powerful influences of board on the culture of company
(Fraser and Simkins 2016). Culture of the company has broader concentration with several
elements that could be regarded such as evasion of bullying and fraud, discrimination and risk
and the encouragement of innovation, inclusion, collaboration, communication as well as
proactive observing and escalation of potential risk.
The changes that can be employed to the remuneration plan in order to reduce agency
conflict is to make it fully transparent, restriction on the capabilities of agent, bonus and
commission structures. The agency issues are mostly prevalent when difference between the
principal and agent (Subramaniam et al. 2015). Thus remaining fully transparent will cater to
reduce the knowledge gap as well as stop the agency problem from evolving. The simplest
procedure to reduce agency issue is to eradicate fiscal incentives that motivates the conflict of
interest.
Answer to question 3