Corporate Governance and Risk Management

This article discusses the behavior of senior management, ignorance and neglect, dubious deals, impending risks and their mitigation, TAB's remuneration plan, ASIC's actions in the scandal of financial planning, the media's role in fostering good governance, the significance of an effective whistle-blower protection policy, issues faced by companies like TAB in the fostering of compliance with ethics and good governance.

Corporate Governance 1
Corporate Governance and Risk Management
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Corporate Governance 2
Question One
The behavior of Senior Management
The management’s actions were void of strength and determination to enforce measures of
any fraudulent allegation. It is a culture that defends the best earners irrespective of their
misconduct while executing their roles. The management is blinded by this culture, and thus
they do not enforce disciplinary measures against the victims. Once Bloe realizes the
dishonest actions of Don, he alerts the head of financial planning who later disregards the
accusations. The reason for this kind of conduct from the management is that Don is
protected by the management against any accusation because he is the leading earner in the
company. Additionally, when Bloe is unsatisfied with the senior management’s response, he
raises the issue to the middle management who equally evade it.
Ignorance and Neglect
The management’s ignorance is apparent when Bloe reports the matter of Don’s dishonesty
to the financial manager. No significant action is taken against the accused concerning the
claims. Additionally, the middle management trifles away Bloe’s allegations. A formal
investigation is only undertaken as a result of pressure from the public.
Dubious Deals
After most of the clients under Don raise issues regarding their financial plans, the
administration realizes this the matters will tarnish the reputation of the company if they
spread further. The administration decides to immediately reinstate Don to hinder or stop the
clients from pursuing their fears. Bloe comes to a conclusion that Don and similar characters
will always be protected by the company including their fraudulent deals.

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The activities that the administration of TAFP is engaged in are risky and illegal. Allais,
Roucoules, and Reyes (2017) assert that an organization with a weak enforcement capacity is
a convincing indication of the vagueness of its authority and roles. Undefined accountability
and authority can lead to noncompliance with the organization's policies and consequently
inefficient operations. Additionally, ignorance amongst the management can result in
catastrophic risks. Assuming the threats that appear small can hamper the organization's
operations since they amount to occupational accidents which are ineffective to the
organization (Edwards, and Clough, 2005). The involvement in dubious deals for individual
gain negatively affects customer satisfaction and lowers the employees’ devotion to quality
work. An organization that fosters an inappropriate culture discourages the worker's
commitment to work
Impending Risks and their mitigation
Conflict of interest
Matters to do with finance are susceptible and can quickly bring wrangles just like in the case
of TAFP. The CEO of TAB, Mr. Venus, should introduce exemption policies on financing.
The CEO should disqualify any staff from engaging in issues that conflict with their interests.
Furthermore, the management should initiate an assessment committee to investigate any
aspect of the matter of conflict of interest.
The unaccountability of business conduct
Eccles, Ioannou, and Serafeim (2012) assert that irresponsible employees at work are as a
result of ineffective enforcement of authority by the management. Defined roles and
unobstructed enforcement of regulations will make each staff act responsibly. Concerning the

Corporate Governance 4
case under study, the administration has the responsibility of addressing fraud assertions. It is
because the management brushes away the fraud allegations that lead to unaccountability.
Security Breach
The corporation needs to adopt strict measures that monitor all activities taking place in the
organization, with a particular emphasis on the procedure of access to the files and
information systems. As the CEO, I will introduce useful administrative functions in the
information systems that are used to gain access to the organization’s data. This will ensure
that all activities associated with clients profiles are regulated and monitored
Questions Two
TAB’s Remuneration plan
The remuneration of the TAB financial planners was pegged on the short-term incentives like
bonuses. The employees were paid commissions on the basis of the risk levels of the
investment assets. This meant that the higher the risk investment, the higher the commission,
thus the financial planners used this as an incentive to inspire their clients to go for the most
risk investment, even if it meant sacrificing integrity.
Impacts of the remuneration plan on corporate culture and Employee behavior
The remuneration plan of TAB nurtures financial planners that are ambitiously selfish
because it exerts pressure on them to achieve commissions at the expense of the
organization's mission. Gosling and Mintzberg (2003) reasons that employees work for a
purpose and not for a living. A compensation plan that rewards the staff by performance only
demotivates them and hampers teamwork. A standard remuneration method should
incorporate recognition and cashless rewards. Ratnatunga and Alam (2011) assert that agency
issues can be addressed through profit sharing, bonus, and retirement plans.

Corporate Governance 5
Question three
Actions taken by ASIC in the course of the scandal of financial planning
The primary role of ASCI is to supervise and monitor investment market on issues of fraud. It
begins by warning TAFP of their non-compliance with the advice on financial planning
systems, who responds sluggishly but at last settles on an average decision, ‘close
supervision.’ It is expected that the whistle-blowers be protected by ASIC of which it doesn’t.
Moreover, ASIC gives an order for handing over the clients’ files for scrutiny.
This decision affirms the claims of fraud on the part of the financial planners. ASIC doesn’t
handle the issue with the gravity it deserves. To make matter worse, it permits TAFP to
tamper with pieces of evidence. It also disregards the convincing pieces of evidence on fraud
which escalates to investment risks on the part of the clients.
Question four
The media’s role in fostering good governance
The decision to engage in the activities of the state, market or society is dependent on
accurate information. Therefore, sufficient information aids the community in making
balanced decisions and taking actions from an informed point of view (Udomsilp, 2012). The
media in its entirety plays the role of informing the society on various matters, integrate them
with societal ethics and share the elements of modernity. Furthermore, the media promotes
accountability in the handling of public services through the publication of information. For
instance, the case of Bloe approaching the journalist to publish the allegations in the
newspaper. The fundamental roles of the press, according to Mahatma Gandhi, are to
understand emotions of the society and address them, raise specific issues, and to expose the
unaccepted problems in the community (Howard, 2015).

Corporate Governance 6
Factors that limit the ineffectiveness of the Media
The inadequacy of information or the availability of ambiguous information is the primary
challenge that the media faces in promoting good governance. The factor fosters the
development of propaganda in public (Kimura et al., 2011). The unresponsiveness of the
government to the pleas made by the media on some issues is another matter that negatively
affects the effectiveness of the media in promoting good governance.
Can social media play a role in enterprise risk management?
Yes. It can play a prominent role in enterprise risk management by being used to monitor
risks. This would include risk detection, risk evaluation, risk survey and integration of risk
management in decision making (Turban, Bolloju, and Liang, 2011).
Question five
The significance of an effective whistle-blower protection policy
The whistle-blower protection policy serves to support the reporting of illegal activities
undertaken in corporations. This fosters integrity and assists in the fight against corruption
through the cooperation with the relevant people (Lobel, 2012).
Were Bloe and other whistle-blowers sufficiently protected by the policy?
No, the whistle-blowers were not adequately protected, even though the whistleblower policy
had been reviewed under the Corporation Act in 2004. This is attributed to the ASIC because
of its untrustworthiness and inefficiency.
Improvements towards encouraging employees cognizant of illegal activities to report
instead of keeping silent.

Corporate Governance 7
The first and foremost strategy of ensuring that illegalities in an organization are reported
promptly is by establishing a whistle-blower protection policy and creating awareness to the
staff concerning its existence and function (Ernst, Kubik and Cruz, 2014). In organizational
situations where it is difficult to streamline operation, and the level of illegal activities is
high, then a specific position of a whistle-blower may be necessary to make it efficient to
report issues and be dealt with promptly.
Question six
Issues faced by companies like TAB in the fostering of compliance with ethics and good
governance
The absence of an established legal and regulatory framework
The primary problem that affects most companies like TAB is the absence of an organized
legal and regulatory framework with the power to enforce (Ameer, 2013). Most organizations
do not have whistle-blower protection policies in addition to structures that foster value
standards amongst the staff. Such an oversight permits the development of illegal activities
at the workplace because there is nobody mandated to specifically create awareness or
enforce disciplinary measures in case of violation. Also, no specific private sector institution
is tasked with the role of fostering effective organizational governance (Ameer, 2013). A
disciplinary agency that addresses explicitly matters on fraud in corporations is necessary to
address the victimization of whistle-blowers by the senior management, an issue that makes
most of the junior staff to keep silent of unethical matters.
Ineffective remuneration plans

Corporate Governance 8
Poor compensation plans discourage the labor force and divert their focus from working
towards the common objective of the company. Effective remuneration systems should be
effected which motivates the workforce and fosters the culture of teamwork.

Corporate Governance 9
References
Allais, R., Roucoules, L. and Reyes, T., 2017. Governance maturity grid: a transition method
for integrating sustainability into companies?. Journal of cleaner production, 140, pp.213-
226.
Ameer, B., 2013. Corporate governance-issues and challenges in Pakistan. International
Journal of Academic Research in Business and Social Sciences, 3(4), p.79.
Eccles, R.G., Ioannou, I. and Serafeim, G., 2012. The impact of a corporate culture of
sustainability on corporate behavior and performance.
Edwards, M. and Clough, R., 2005. Corporate governance and performance: an exploration
of the connection in a public sector context. Canberra: University of Canberra.
Ernst, B.A., Kubik, J.J. and Cruz, A.F., 2014. How program managers can use
whistleblowing to reduce fraud within government organizations (Doctoral dissertation,
Monterey, California: Naval Postgraduate School).
Gosling, J. and Mintzberg, H., 2003. The five minds of a manager. Harvard business
review, 81(11), pp.54-63.
Howard, R., 2015. Conflict-Sensitive Journalism:(r) evolution in media peacebuilding.
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Kimura, H., Suharko, M., Javier, A.B. and Tangsupvattana, A., 2011. Limits of good
governance in developing countries.
Lobel, O., 2012. Linking prevention, detection, and whistleblowing: principles for designing
effective reporting systems. S. Tex. L. Rev., 54, p.37.

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Ratnatunga, J. and Alam, M., 2011. Strategic governance and management accounting:
Evidence from a case study. Abacus, 47(3), pp.343-382.
Turban, E., Bolloju, N. and Liang, T.P., 2011. Enterprise social networking: Opportunities,
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Commerce, 21(3), pp.202-220.
Udomsilp, A., 2012. The Role of Media In Promoting Good Governance. Asia Pacific
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