Corporate Governance and Risk Management: A Reflective Essay

Running head: CORPORATE GOVERNANCE AND RISK MANAGEMENT
A Reflective Essay on Corporate Governance and Risk Management
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1CORPORATE GOVERNANCE AND RISK MANAGEMENT
Introduction
The advent of 21st century has recognised the role of the Board of Directors in the area
of Strategic Management in marketing finance and operations divisions. The essence of
Corporate Governance correlates with uniting the day to day business of the enterprise with
the Codes of Company Law (Davies 2016). Such responsibilities are generally administered
by the experts of banking and monetary regulations, auditors and primarily, the board of
directors who are in charge of managing the massive liquidity of the enterprise. A business
enterprise operates amidst various levels of risk that are deep-seated within its processes.
Only with effective recognition of these significant risks can an organisation operate
successfully. The following essay iterates the role of management in establishing socially
responsible organisations by maintaining the ethical aspects in decision making pertaining to
corporate governance and risk management.
Role of Managers in Corporate Governance
The framework of laws and regulations followed by a Public Company comprise of
necessary flexibility due to which they are easily capable of adjusting their business
requirements to the ever-changing environment (Mason and Simmons 2014). This furthers
the proactive engagement of the important shareholders and investors of the firm who,
reaping benefits from the customised practices, are able to dedicate resourceful proposals,
governance outreach and efficient portfolios to the firm. As observed by Elkington (2013),
these institutional investors also participate in the strategic decision making and play
noteworthy role in corporate social responsibility along with the board of directors. Often, the
board of directors encourage the shareholders to share their valuable inputs in matters of
capital allocation and implementation of programs and campaigns that are in compliance with
the ethical standards of corporate strategies. Thus, empowering the shareholders and

2CORPORATE GOVERNANCE AND RISK MANAGEMENT
investors, in a way of making them partial owners, the new-age business enterprises strive to
set an example of the modern corporate governance (Brower and Mahajan 2013).
Risk Management in Corporate Governance
In my experience as an associate in such an enterprise which is established on a
framework of flexible implementation strategies, I have been able to understand the
importance of identifying the weakest critical controls in risk management. In my
organisation the approach to risk management is adapted after careful consideration of its
potential impact and benefits on the business processes, the production process, the operators,
the investors, suppliers and the services provided. After a thorough analysis of all such
aspects, a comprehensive route to decision making is formulated which is embedded with the
effective tactics and strategies to deal with the risk. By following such method, our
organisation is able to acquire an upper-hand on the risks.
Role played by Corporate Directors and Risk Managers in responding to
Shareholders’ needs
A common practice that I have encountered in our organisation is that to sustain the
agency costs, the management encourages the dynamic participation of shareholders. The
shareholders possess the unique capability of mobilising the resources even though they lack
the perspective or outlook of the company’s managers. Through such mobilisation and
transparency, new incentive mechanisms evolve and lead to value creation over time
(Todorovic 2013). In our organisation, the external shareholders are known to deliver
propositions that are more commonly known as ‘short-termism’ to our management body.
However, the ultimate decision is always in the hands of the board of directors whether or not
to give in to those compelling intentions.