Impact of Corporate Governance on Risk Management Practices: ASEAN Economies

Running head: IMPACT OF CORPORATE GOVERNANCE
Impact of Corporate Governance on Risk Management Practices: ASEAN Economies
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IMPACT OF CORPORATE GOVERNANCE
1. Introduction
Corporate governance could be stated as the distinct combination or amalgamation of
different rules, procedures and laws through which several businesses are being eventually
controlled, regulated as well as operated (Tricker & Tricker, 2015). This type of governance is
responsible for encompassing the respective external as well as internal factors that impact the
overall effects of the business stakeholders such as shareholders, clients, suppliers, and
management as well as government regulator. The subsequent board of directors is solely
responsible for successful creation of the framework for corporate governance that is helpful in
properly aligning the business operations with their respective objectives (Armstrong et al.,
2015).
Different specific procedures, which could be successfully outlined within this corporate
governance involve various action plans, performance measurements, disclosure practice,
dividend policies and executive compensation decision. It is helpful in reducing the conflicts in
the business and hence maintain contracts within the stakeholders and the company (Yermack,
2017). Ethical standards and rules are being maintained with such approach and the
organizational growth and development is increased to a high level. This essay will be outlining
a brief description on the impact of corporate governance over various practices of risk
management for ASEAN economies with relevant details.
2. Literature Review
2.1 Brief Description of ASEAN Firms
ASEAN or the Association of Southeast Asian Nations can be referred to as the regional
inter governmental company, which comprises 10 distinct and popular countries within the
region of Southeast Asia (ASEAN. 2020). This particular association is responsible for
promoting subsequent intergovernmental cooperation and then facilitates various economic,
socio cultural, educational, and military, security and political integration amongst the respective
members as well as other countries within Asia.
The Association of Southeast Asian Nations maintains a globalized network for alliances
as well as dialogue partners for better consideration by several global power houses. It is referred
to as the distinct cooperation of Asia and Pacific as well as an influential or prominent
organization, which is included in numerous international affairs in the world (ASEAN. 2020).
The Secretariat of ASEAN is situated in Jakarta, Indonesia. Several distinct and popular firms
are associated with the Association of Southeast Asian Nations.
2.2 Evolution of Corporate Governance and Risks Management Practices among Non
Financial Firms in ASEAN Firms
The Association of Southeast Asian Nations or ASEAN comprises of several non
financial firms that are associated with them. As a result, they have been enjoying a distinct and
important position in the business approach for understanding the economic growth and
development as well as social progress in the most effective manner (McCahery, Sautner &
Starks, 2016). The major aim and purpose of this ASEAN is ensuring social progress as well as
cultural development within the region and ensure mutual assistance and collaboration for
common interests. It is also responsible for providing assistance to one another within the form
of training and researching facilities and cooperate for effective usage of industry and agriculture

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IMPACT OF CORPORATE GOVERNANCE
for raising the respective living standards of the individuals; hence maintaining a beneficial
collaboration with the existing international companies (Jiang & Kim, 2015).
The most popular and significant non financial firms associated with ASEAN include
Singtel Limited, Capitaland Limited, Flextronics International Limited, Keppel Corporation
Limited, Fraser and Neave Limited, Genting Berhad, Petronas Petroleum Nasional Bhd, San
Miguel Corporation and many more (ASEAN. 2020). All of these organizations or firms are
extremely successful in their respective industries and hence have been enjoying the top
positions accordingly.
According to Aguilera et al. (2015), one of the major and the most distinct and important
success criteria or reasons of the organization to gain maximum success and opportunity in their
businesses is that they have been following different aspects and features for corporate
governance as well as risk management, so that it becomes quite easier for them to identify the
probable risks and threats to the business and process to deal with them successfully (De Haan &
Vlahu, 2016). Moreover, these are responsible for understanding the procedures, by which
different steps and approaches would be undertaken by them and ensure that maximum success
is being achieved under every circumstance.
Larcker and Tayan (2015) stated that the evolution of corporate governance has always
been an important and significant aspect for managerial accountability, stakeholder rights and
board structure. The non financial firms of ASEAN had been following corporate governance in
their organizations for several years. The balance of power and decision making process within
the board directors, shareholders and executives is being maintained under every circumstance
(Hong, Li & Minor, 2016). As a result, the major issues and complexities are eradicated
successfully. The organizations are growing and thriving with strong economy for the
involvement of corporate governance. They have been able to ensure that they are collecting
different mechanisms, relations and procedures, through which various corporations are
controlled as well as operated (Dignam & Galanis, 2016). Distinct principles and structures of
governance eventually recognize the even dispersal of various rights and responsibilities
amongst major participants in the corporation and involve procedures and rules, while making
different decisions within the respective corporate affairs.
As per McNeil, Frey and Embrechts (2015), the ASEAN countries have also focused on
distinct practices of risk management for understanding if the probable risks and threats are
eradicated on top priority. The major and the most important steps of a risk management process
include identification of different risks, analysis of those risks, evaluation or ranking of the risks,
treating the risk and finally monitoring as well as reviewing the risks (Hopkin, 2018). Risk
management is possible after involvement of few distinct techniques, which include avoidance,
reduction, sharing and retention. The most distinct and noteworthy practices of risk management
include involvement of stakeholders, toning from the top management, increasing
communication, clarity in risk management policies and constant monitoring as well as
observation (Glendon, Clarke & McKenna, 2016).
The evolution of risk management in the non financial firms in ASEAN has been
extremely efficiently effective for the businesses. Proper management of risks has become
paramount within proper understanding the global market place (Ho et al., 2015). Moreover,
these companies are providing incremented consideration to the economic capital as well as