A Personal Reflection on Corporate Governance and Risk Management

This essay provides a reflective analysis of corporate governance and risk management, drawing upon the author's personal and professional experiences. The essay begins by defining corporate governance, emphasizing its systematic nature and universal application, and highlighting the roles of key participants like the board of directors, managers, and shareholders. It discusses the importance of good corporate governance in ensuring effective management, financial health, and investor confidence, referencing the OECD principles as a global benchmark. The essay then delves into the concept of risk management, outlining different levels of risk (strategic, management, and operational) and the significance of identifying and managing risks proactively. It also explores the challenges in corporate governance, such as selecting competent board members and ensuring accountability, while also touching upon the importance of corporate social responsibility (CSR). The author concludes by emphasizing the personal and professional benefits of understanding corporate governance and its role in maximizing stakeholder value.

Running head: REFLECTION ON CORPORATE GOVERNANCE
REFLECTION ON CORPORATE GOVERNANCE
Name of the student
Name of the university
Author Note

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REFLECTION ON CORPORATE GOVERNANCE
This essay aims to reflect the insightful connections of my present experiences regarding
corporate governance and risk management issues. The structure and function of the economy
have gained attractions from all domain of the social organization. The essay contrasts the
understanding in the field of political, social, and cultural orientations at the corporate level. This
paper aims at discussing the characteristic features and the issues related to corporate governance
and risk management from my personal experiences. It presents its role and importance with the
support of theories and practices followed in different organizations. It also includes corporate
social responsibility and its increasing demands in the present scenario.
According to me, corporate governance refers to the idea of management and governance
of the company with the help of set rules, principles, practices and guidelines. Its structure
determines the rights and responsibilities among the primary participants of the organization
such as the board of directors, the managers and the shareholders. They collectively, provide the
guidelines to direct and control the organization in order to fulfil its goals and objectives. The
organization brings out some practical features of corporate governance that is the commitment
of values, ethics and disciplines to the underlying principles. Its power is exercised over a
corporate identity (Clarke 2016). The corporate governance, in my view, seems very systematic
and has a universal application voluntarily all over the world. It is based on laws, practices and
procedures that is made to protect the stakeholders’ right and increase the shareholder’s wealth.
It deals with certain obligations where the board members are accountable to them. From my
personal experiences, good corporate governance facilitates the effective management by
contributing to the better performance and proper functioning of the organization in the
economy. It is important as it determines the financial health of the organization and has a
bearing of risk on investors’ perception (Subanidja 2016). The good corporate governance

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measures the lower risk that is reflected in the shareholder value and capital costs. It is the
essential criteria for the foreign institutional investors to decide upon which company to invest
in.
The Organization for Economic Cooperation and Development is an international
benchmark set for the policy makers, different investors, corporations and the stakeholders
globally. It has proposed certain principles for the development of good corporate governance
(Davies 2016). The building of OECD principles includes the following: It ensures the
framework that provides the basis of effective corporate governance. It securely protects and
facilitates the right of the shareholders and principal owners. The equal treatment is provided to
all shareholders, minor, major or foreign shareholders. The board members directly or indirectly
disclose the matter related to governance to the shareholders. The framework recognizes the role
of stakeholders and their rights established by law. It ensures that the accurate and timely
information is disclosed regarding the performance, financial situation ownership and
governance of the organization. The governance framework provides effective monitoring by the
board members and the strategic guidance of the organization to be culpable to the company and
the shareholders (Şahin 2018).
The organization faces external and internal risks that are not in control of the
management. The risk management is considered as the prime cause of uncertainty in the
organization. The good corporate governance focuses on identifying the risks and managing
them before it affects the business. The knowledge of the risk and the ability to control it helps
the organization to act confidentially and take better future decisions (Hopkin 2018). The
corporate risks arise at three different levels, and they are strategic, management and operational.
The strategic level risks are the threats from the outside of the organization. The management

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level involves the risk of the organization's activities. The operational level is the risks within the
organization. The effective management of risk provides the comfort to the shareholders,
managers, customers and society. The board of directors judiciously select and manages the risks
taken by the association to increase its stock value (Tara and Sadri 2019). This concept of
corporate governance had helped me personally and professionally, in managing the risk of any
organization. Since it has a vital role in the effective management and performance of the
organization, it helps me in taking the strategic decision and proper understanding of all the
processes involved in the business. This, in turn, increases the efficiency of the organization at
different levels.
Even though corporate governance contributes to the success of the organization, some
issues affect the working condition and are accountable. The selection of the right board
members is a critical issue for any organization. The board members should be expert,
experienced and selected from a diverse group of people. They are the ones who control the
management at every level (Admati 2017). Another issue is the accountability of board members
towards the shareholders. It is mandatory for the board members to present every meeting in the
presence of the shareholders and incite a healthy relation. The constitution of corporate social
responsibility (CSR) committee to meet the specific criteria is also an issue for the management.
This committee frames the CSR policy. According to the policy, any organization is enforced to
spend at least 2 per cent of the average net profits of last three financial years on corporate social
responsibility activities (Dentchev, Haezendonck and Balen 2017). If the expenditure is not
proper, then justification is required. Thus, the risk management team is accountable for the
assessment of critical risk that adversely affects the activities of the organization. It ensures the

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recognition of significant risks; regularly update the business strategies and the risk management
policies.
Corporate Governance is an integral part of any organization, and its adaptation increases
the wealth of the shareholders. Experiencing the different aspects of managing risk inherited in
the organization’s goals and objectives helped me in personal development. Various active
principles and issues that arise in between the functioning of administration assist me in
developing and building good corporate governance. However, my ultimate objective is
achieving the high standard procedures by practicing the rules and principles of the organization
in the corporate world to maximize stakeholders’ value in the future.

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Reference:
Admati, A.R., 2017. A skeptical view of financialized corporate governance. Journal of
Economic Perspectives, 31(3), pp.131-50.
Clarke, T., 2016. The continuing diversity of corporate governance: Theories of convergence and
variety. Ephemera: Theory and Politics in Organization.
Davies, A., 2016. The globalisation of corporate governance: The challenge of clashing cultures.
Routledge.
Dentchev, N.A., Haezendonck, E. and van Balen, M., 2017. The role of governments in the
business and society debate. Business & Society, 56(4), pp.527-544.
Hopkin, P., 2018. Fundamentals of risk management: understanding, evaluating and
implementing effective risk management. Kogan Page Publishers.
Şahin, A., 2018. How Principles of Business Ethics Relates to Corporate Governance and
Directors? European Journal of Economics and Business Studies, 4(3), pp.22-27.
Subanidja, S., Rajasa, A., Suharto, E. and Atmanto, J.D., 2016. The Determinants of Firm Value:
The Role of Earnings Management and Good Corporate Governance. Corporate
Ownership and Control, 13(4), pp.609-615.
Tara, S. and Sadri, S. (2019). [online] Researchleap.com. Available at:
https://researchleap.com/wp-content/uploads/2015/08/3.-Corporate-Governance-and-
Risk-Management-An-Indian-Perspective.pdf [Accessed 29 Mar. 2019].