Corporate Governance, Risk Management, and CSR Analysis

This report provides a comprehensive analysis of corporate governance, risk management, and corporate social responsibility (CSR). It examines the potential liabilities of company directors, the importance of ethical conduct, and the role of risk management in strategic decision-making. The report discusses the UK Corporate Governance Code and its impact on companies listed on the London Stock Exchange, highlighting key issues such as conflict of interest, accountability, and transparency. It also delves into risk management strategies, including risk classification and the implementation of risk management protocols. Furthermore, the report explores the significance of CSR, encompassing community engagement, environmentally responsible practices, and socially accountable employee relations. The document emphasizes the importance of a strong risk-aware culture and the integration of risk management into all levels of an organization.

Running head: CORPORATE GOVERNANCE
CORPORATE GOVERNANCE
Name of the student
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Potential liability of the company
The liability regime of the non-executive as well as executive director of the company
creates a requisite corollary to the control issues in an enterprise. It is rest on the determination of
the particular obligation it construct the extent of management conduct and it facilitates
stakeholders as well as third parties pact with the corporation with the legislative safeguard
against the misconduct of management. In that aspect the liability of the director of the company
is a significant and efficient compliance and also mechanism of risk allocation in the enterprise1.
The participation of the employee can play a significant character in the effect that the
regulations on the duties of the director and also potential liability have in run through.
The analysis and comparison concerning the substantive statute that regulates the duties
of the directors shield extensive range of procedural and material aspects noticeably the
following. Firstly who possess the obligation and to whom addresses the obligation. Secondly
how and where the duties of the directors of the company can be discoursed in the legislation
under regulatory method. Thirdly, the method interest of the enterprise is defined2. Fourthly what
symbolizes the material content of the duties of director that is duty of loyalty and care. Fifthly
the nature of potential liability shield in particular the scope to which the director is responsible
in respect of decision that was adopted by board. Sixthly it describe the category of obligation
1 Miller, Geoffrey P. The law of governance, risk management, and compliance. (Wolters Kluwer Law &
Business, 2017).
2 Choudhary, Usman, et al. "System and method for auditing governance, risk, and compliance using a pluggable
correlation architecture." 2018 U.S. Patent No. 10,057,285. 21 Aug.

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moving from the violation of responsibility as well as the restriction to the liability. The
legislation of the member nation is diverse in respect of both general method to regulation of
duties of director that is grounded on the structure of the statutory rules or the general doctrines
of legislation that is law of agency or fiduciary principles3. They are amplified and elaborate by
the adjudicating authority and the margin of description with which the obligations are set forth.
The most complicated portion includes those individuals who do not conduct as they
were de jure directors nor purports to be the directors. They rather practice certain level of
influence over the affairs of the corporation that provides them a margin of factual dominion in
comparison to the authority that is typically rest to the board. furthermore theoretically in the
jurisdiction of civil law the direct legal association between the shareholders, directors and other
constituencies may evolve from application of general doctrines of law especially tort law. The
general clauses of tort law that can be observed in several jurisdiction might expose that
probability as they facilitate for obligation for any injury that was caused due to the negligent or
intentional tort. Nevertheless, the court limit the application of general provision and in some
jurisdiction general doctrines do not observe to function a significant character in practice4. The
third category of the jurisdiction of civil law demarcates legislation between the internal
obligation of director to the company as well as external obligation to the shareholders or third
parties5. The external liability generally necessitate the behavior that goes beyond mere conflicts
3 Sadgrove, Kit. The complete guide to business risk management. (Routledge, 2016).
4 Griffith, Sean J. "Corporate governance in an era of compliance." 2018 Wm. & Mary L. Rev. 57 2075.
5 Crête, Raymonde. "The Volkswagen scandal from the viewpoint of corporate governance." (2016) European
Journal of Risk Regulation 7.1 25-31.

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or management of interest and is generated by the violation of specific legal necessities of the
corporation laws or articles of association, behavior that hamper exclusively the entitlement of
shareholders or drawing up misleading accounts.
Governance issues
All the corporation with premium listing on main market irrespective of their country of
registration required to apply under the Corporate Governance Code of United Kingdom as well
as facilitate the shareholders with anti-dilutive preventive entitlement when there is issuance of
new shares. The corporation with the global depositary rights or Standards Listing of Shares
have to comply with the minimum requirements of EU that involves requirements under EU
company reporting directive to facilitate the statement of corporate governance amplifying the
code of corporate governance to which the issuer is subject as well as description of internal
control and risk management structure of the company6. The section of the corporate governance
code of United Kingdom are regarded to be high grade standards of governance. Financial,
operational, strategic and governance issues have dominated engagement in between the
investors and board of the company. Nevertheless more attention is required to be paid on risk
connected to ethical conduct of business, environment, health and safety, labor relation due to
the potential significant impact on the performance of the company7. The issue that can be raised
in corporate governance is conflict of interest the efficient corporate governance need the board
6 Talesh, Shauhin A. "Data breach, privacy, and cyber insurance: How insurance companies act as “compliance
managers” for businesses." (2016) Law & Social Inquiry 43.2 417-440.
7 Soltani, Bahram, and Christian Maupetit. "Importance of core values of ethics, integrity and accountability in the
European corporate governance codes." (2016) Journal of Management & Governance 19.2 259-284.

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of directors of the company to have considerable supervision of the practices and procedures of
the company. Another issue is accountability which involves that accountability is required for
efficient practice of corporate governance. From trop level executives to lower tier employees
each division and level of the company must report as well as held accountable to another as the
structure of balance and check. Transparency which involves that the company should accurately
report on their loss and profits in addition to that make figures obtainable to those who make
invest in the company. In the context of ethical violence as the issues faced in the practice of
corporate governance the associates of executive board have ethical obligation to make decision
that is grounded on the best interest of stockholders.
The association in between the shareholders and the company have never been significant
factor. The ever-raising series of options of global investment, the corporation require to
concentrate on constructing long term relationship with the investors that is embedded on regular
communications and trust. Thus in attaining the same the corporation will enhance the full
advantage of being listed as the public sector. The element of corporate governance exist at the
core of the process. The London Stock Exchange Group firmly believe that the high standards of
corporate governance creates the significant contribution to the long-term performance of the
company8. Therefore by regularly developing ad reviewing the proper practices of corporate
governance both the global company and United Company on market can guaranteed that are
better positioned to implement strategies as well as manage drive value and growth whatever the
subsisting macro-economic conditions. According to London Stock Exchange the corporate
8 Tricker, RI Bob, and Robert Ian Tricker. Corporate governance: Principles, policies, and practices. (Oxford
University Press, 2015).

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governance code of United Kingdom cater as the standard by which public enterprise must aspire
however full coherence must not necessarily be the anticipation for AIM Company. The
corporation with premium listing on London Stock Exchange are subject to the doctrines that are
set forth in the corporate governance code of United Kingdom that is issued by Financial
Reporting Council. The code is not obligatory the company should either comply with the
guidelines of governance or explain in case of deviation.
The description of compliance or relevant explanation will classically require to be
involved in IPO prospectus. The Code involves five areas of concentration that are leadership,
accountability, effectiveness, remuneration and association with the shareholders in advancing
disclosures, fairness, transparency and so allowing third parties to make cognizant decisions on
investment9. The code is targeted at guaranteeing that the interest of the shareholders are
appropriately symbolized within the governance of public corporation. the issuers might
formulate framework in the formal compliance with code however odds with spirit, the research
exhibits that market provide equal weight in complying with letter and spirit of the code of
corporate governance. There are several facades to the code that necessitating the grade of
interpretation. It is enumerated that the set of doctrines to invite flexibility to the issuers while
the choices of explanation cater to stabilize any non-compliance10.
9 Whitton, John, et al. "Shale gas governance in the United Kingdom and the United States: Opportunities for public
participation and the implications for social justice." (2016) Energy Research & Social Science 26 11-22.
10 Graham, Julia, and David Kaye. A Risk Management Approach to Business Continuity: Aligning Business
Continuity and Corporate Governance. (Rothstein Publishing, 2015).

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Risk management
Risk management is an enhancing significant driver of business as well the stakeholder of
the company have concerned about risk. Risk might be the driver of the strategic decision. It
might be the provision of uncertainty in the organization or simply rooted in the conduct of the
enterprise. The enterprise wide method to the process of risk management permit the
organization to regard the potential outcome of all categories of risk on all procedures,
stakeholders, activities, services and products. Thus implementation of detailed method will
impacting in the company benefitting from whet is often termed as “upside of risk”. Furthermore
there is necessity to comprehend the risk being undertaken when pursuing to attain objectives as
well as achieving the expected margin of recognition. The organization require to understand the
overall margin of risk that is embedded in the activities and processes11. It is significant for the
organization to determine and also prioritize the important risk factor as well as to determine the
weakest critical regulation. the initiative for successful management of enterprise risk can affect
the probability and impact of risk materializing in addition to that confer advantages connected
to improved strategic decision , effective delivery of the change as well as advanced operational
efficiency12. The other advantages involve minimize the expense of capital, more accurate fiscal
reporting, competitive benefit, improved [perception of the company, advance marketplace
11 Schapper, Paul R., João Nuno Veiga Malta, and Diane L. Gilbert. "Analytical framework for the management and
reform of public procurement." 2017 International handbook of public procurement. Routledge,. 119-136.
12 McNeil, Alexander J., Rüdiger Frey, and Paul Embrechts. Quantitative risk management: concepts,
techniques and tools-revised edition. (Princeton university press, 2015).

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presence in addition to that in instances of public service company the enhanced community and
political assistances.
The risk strategy, architecture as well as protocols symbolizes the internal arrangements
regarding the interaction on risk issues. It also set forth the responsibilities and roles of the
committees and individual that aid the process of risk management. The risk strategy must set
forth the aim that the activities of risk management in the company are pursuing to attain. Thus
the risk management protocols describe the process by which the strategy will be applied as well
as risk managed. Implanting risk management engages an environment that can establish
leadership from the senior management, involvement of the staff at all rank, the practice of
learning from experience, proper accountability for conduct as well as good communication on
the issues of risk13. Risk can effect in long term and short term14. The risk are connected to the
strategy and tactics, operations respectively. The strategies set forth the long term object of the
company in addition to that horizon of strategic planning of the organization will typically 3.5 or
more years. The tactics describe how the company intends to attain development15. Thus the
tactical risk are connected typically with mergers, projects, acquisition as well as product
13 Ho, Virginia Harper. "Comply or Explain and the future of nonfinancial reporting." (2017): Lewis & Clark L.
Rev. 21 317.
14 Rouillard, Josselin J., et al. "Policy implementation of catchment-scale flood risk management: learning from
Scotland and England." (2015): Environmental Science & Policy 50 155-165.
15 Layton, Timothy P. Information Security: Design, implementation, measurement, and compliance. (CRC
Press, 2016).

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development. Operations are the routine conduct of the company. The significant part of the
examining the risk is to identify the scope, nature or the category of effect of risk16. The
examination of risk in this method might be advanced by the implication of system of risk
classification.
The system of risk classification are significant as they permit the organization to
determine the accumulation of identical risk, the risk classification structure also permit the
organization to determine which tactics, strategy, and operations are most exposed17. The risk
classification structure are generally rest on the demarcation of risk into those connected to fiscal
control, reputational exposure, operational efficiency as well as commercial activities.
Furthermore it must be integrated into the culture of the company and thus will involve mandate,
commitment and leadership from the board. It should convert the risk strategy in operational and
tactical aims and also assign responsibilities of risk management throughout the company. It
must aid performance measurement, accountability, as well as reward, thus enhance the
operational efficiency at all margin. Attaining good risk aware culture is guaranteed by creating a
proper risk strategy architecture and protocols. At board level the risk appetite is the driver of the
strategic decision on risk. At the operational level the risk appetite instruct the operational
restriction for the routine conduct18.
16 Stein, Volker, and Arnd Wiedemann. "Risk governance: conceptualization, tasks, and research agenda." (2016):
Journal of Business Economics 86.8 813-836.
17 Rose, Caspar. "Firm performance and comply or explain disclosure in corporate governance." (2016): European
Management Journal 34.3 202-222.

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Corporate social responsibility
The corporate social responsibility is the concern of the company for the matters as the
community engagement, socially accountable processes and products, concern for environment
as well as socially accountable employee relations. The concern of socially accountable behavior
are not novel and instances can be detected from throughout the world. The matter that is of
particular significant for the company and more important is the substance of risk and
management of the same. The shareholder method to the process of decision making as well as
management of the corporation is likely to determine risk and managed them in improved
manner. Risk is connected to sustainability and exhibit that deficit of full comprehension of what
is termed by sustainability in addition to that especially by sustainable development implies that
issue is disorganized in the corporate reporting and planning.
The corporate social responsibility safeguards the enterprise against long term loss. When
the enterprise have social accountability they assess the risk and expense of failure. Firstly the
corporation has accountability to the shareholders and all the stakeholders that implies that it has
obligation to all society. The corporate failure lead to the significant effect on the society also.
Several stakeholders that is customer, employee, suppliers, consumers along with that
shareholders and regulators of the organization have accountability to guarantee good
performance. Thus CSR is not only related to the organization however connected to the society.
Thus developing the character of corporate responsibility moves or shifts the
concentration from the actual issue that society requires to discourse. One of the cause for this
18 Amsler, Lisa Blomgren. "Collaborative governance: Integrating management, politics, and law." (2016) Public
Administration Review 76.5 700-711.

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impact is the growing competition between the market and corporation. The managers in the
corporation are inclined to become ambitious than prior in their status and conduct in globalized
world. Thus focus required to be contribute on the managerial and corporate behavior. The issues
that evolve is the way to behave as the socially accountable manager and to resolve the vital
problem in business and society19. In the commercial world there are some principles, rules,
norms in addition to that legal requirement and regulations. Nevertheless to become socially
accountable one should be more than law abiding who has the ability of acting and also held
responsible for actions and decisions. The issue is the implementation for all the directions for
the corporations as well as managerial behavior. Thus firm require to concentrate on establishing
values not only in fiscal terms however also in social and ecological terms. The issues that are
encountered by the business sector is the method to fulfill the expectations. The organization will
require to develop not only in themselves however also in the method they interact with
environment. The implementation of CSR is one of the significant concern for the globalized
market and economy. CSR need some regulation for determination of association between
society and corporation however is still in complicated procedure. The implication is that
Corporate Social Responsibility is not merely a simple procedure however also require a long
term strategic approach by the organization that need to learn the socially accountable behavior
as well as decision makers should enforce these doctrines in the corporation.
When the organization take long term perspective it will have advantages concerning
stakeholder’s interest and profit in the company. Some research exhibit that there is clear
19 Mennie, Phil. Social media risk and governance: Managing enterprise risk.( Kogan Page Publishers,
2015).

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association between corporate fiscal performance and CSR which is the significant topic of
academic research. The research effect concentrates on the existence of slack resources
impacting from fiscal performance made when organization invest in zones that are connected to
social actions. The obligation of the corporation is catering the shareholders by facilitating
proper services and products. Globalization has diverse impact on social responsibility of the
corporation as well as behavior of the managers. Some of them aid managers or company for
encouraging towards the socially accountable behavior while others damaging fair business as
well as principles, regulations, norms that are the outcome of growing competition. The
globalization must facilitate the corporation with opportunities for attaining individuals as well
as customers in addition to that collaboration with other organization worldwide. The socially
accountable investment and behavior gives opportunity to the organization that are more visible
than others and express more concern for the stakeholders. The organization can implement the
opportunities in both manner which is that the good behavior affect company in positive manner
however unethical behavior put detrimental impact to the organization20.
Instances of other companies facing issues
Coca cola has a business conduct code that intends at facilitating guidelines to its
employees on amongst others things that is anti-corruption and corruption issues. The
corporation has adopted global guidelines of CSR such as Ruggie’s protect and global impact,
remedy and respect framework however these guidelines do not appear to be integrated in to
business code. Nevertheless these CSR initiatives are involved in other policies or activities of
the organization. For example the United Nation Global Compact principles are cross-referenced
20 Gunningham, Neil, and Cameron Holley. "Next-generation environmental regulation: Law, regulation, and
governance." (2016) Annual Review of Law and Social Science 12 273-293.