A board’s corporate governance role requires oversight, understanding, and foresight. Board directors need to be more vigilant and make informed decisions as the business environment becomes more complex and volatile. It also requires coordinated efforts by all employees to ensure company success.
A well-formed board should comprise members who have a wide range of expertise and perspectives that are able to challenge the board’s beliefs and views. This will help facilitate more comprehensive discussions and increase the board’s effectiveness.
As the board’s responsibilities continue to evolve, it must be prepared to address new technologies and important issues like climate change and diversity disclosures that can impact the bottom line of a company. It is also essential to create an environment that promotes and encourages continual education and punishes complacency.
The board should establish strategic goals and objectives both short-term and long-term, and implement mechanisms for monitoring the progress toward these goals. The board oversees the chief executives and establishes the policies and guidelines for the operation of the business.
The board is responsible to determine what risks are acceptable and how to balance these risks with safeguarding shareholder interests. The board should conduct risk assessments, establish guidelines to guide their own actions as well as the actions of the manager and establish accountability systems to fulfill its stewardship responsibility.
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