When an organization adopts a governance policy, it is in effect undertaking a long-term commitment to uphold the policy. This entails continuous evaluation of the potential impact of those policies and procedures on business processes and internal controls and objectives. This assessment is undertaken by external risk management firms who are charged with identifying and documenting any potential risks that organizations policies or procedures may create or unintentionally create. The risk manager will then identify and describe the potential impact on the organizations functioning and objectives. These objectives may range from financial and operational to social and ethical and requires an intensive analysis of the risks and their implications. Governance compliance risk is therefore the concern of corporate governance and policy review teams.
How to Know About Corporate Governance Compliance Risk
Governance compliance, also referred to as corporate governance, is a practice involving continuous evaluation of an organization’s policies and procedures in order to assure that these policies and procedures do not create or unintentionally weaken corporate governance. Such a weakening could potentially lead to the collapse of a company. Thus, the practice involves three key components – strategic, operational, and regulatory – each of which requires periodic monitoring and review to ensure that these policies and procedures are still relevant and effective in the modern environment and to ensure the continued maintenance of organizational value.
A policy and procedure should be adopted in an orderly and systematic manner that ensures its implementation and maintenance of benefits, while ensuring compliance with applicable laws, regulations, and international standards. In addition, the policies and procedures should be monitored and reviewed regularly for any indications of deterioration. This periodic monitoring and review provide an opportunity for feedback that would facilitate an improvement in the corporate governance environment. All these require expertise and specialised skills from a variety of external agencies and support services.