Corporate Governance and Risk Management

Question: Discuss about the Corporate Governance and Risk Management. Answer: Introduction The present assignment incorporates the discussion on the concept of corporate governance and risk management together by analysing the role of managers and directors to create socially responsible entities. The essay further explains the corporate governance role and risk management to respond for several requirements of organisational stakeholders. Further, the assignment covers the relative issues involved in the corporate governance and risk management that influence the various business decisions and effective governing of the activities. As it is essential for the management of the organisations to ensure the best practice in corporate government, several ethical issues of management has been identified and analysed in the present assignment. Corporate governance refers to the organisational structure that describes the rules, systems and procedures by which the managerial authority is exercised with the organisations. Good corporate governance involves and ensures the balancing of organisational stakeholders interests and benefits as well as assists in achieving the objectives of the organisation (Tricker and Tricker 2015). Besides, risk management is a procedure that identifies analyses and mitigates the potential uncertainty in the investment decisions. It refers to a process which helps in identification, assessment and controlling the probable threats that could affect the companys capital investment return and overall earnings (McGregor and Smit 2017). It is essential for the business organisations to create a structure of corporate governance principles and standards as directed towards the value of organization and social responsibility. As per the conceptual framework, it is mandatory for the listed companies to form structured principles and standards to form appropriate corporate governance for the benefit of stakeholders and potential investors. The key principles required to be structured are establishment of specific responsibilities of the management to evaluate and monitor their performance and the composition of organisational board should include specific size, competence and skills (Browning and Sparks 2016). While analysing the principle of management responsibilities and composition of board I found that corporate governance statement of Woolworths Group, the organisational board comprised of four committees, each with specific responsibilities to monitor the business activities (Woolworthsgroup.com.au 2017). The rol es and responsibilities of the companys board defied to serve the best interests of the shareholders and companys performance. Being a largest retailing organisation in Australia, Woolworths Groups objective associates to maintain as well as enhance the value for the shareholders other than maximising profit margin. Corporate governance regulates the duties of directors that involves establishment of companys vision, mission and values to achieve the desired goals in accordance with the regulations and policies. Analysing the duties of directors with respect to the corporate governance, I can say that directors as well as executive officers are responsible to evaluate the strengths and opportunities of the company. The role of directors and the management includes identification and analysis of potential threats and weaknesses that would hamper the growth and sustainability of the company. Accordingly, it can be said that the process of risk management is incorporated in the roles and responsibilities of directors. However, other than the directors and management, other internal stakeholders of the company are responsible for the effective management and governance of the business (Williams 2013). Company secretary, key managerial person of the company is responsible to evaluate the compliance of all necessary regulations for recognising and reporting the statutory documents and financial statement. Similarly, the chairman and the chief executive officer of the company is responsible to eval uate the performance and contribution of directors and other officers which includes commencement of effective board meetings, development process and other activities. According to my analysis on corporate governance report of Woolworths Group, the company secretary Dr Richard Dammery reportedly complied the regulations to monitor the services performed by companys directors (Woolworthsgroup.com.au 2017). In addition I analysed that the corporate governance of the company also involves assessment of internal control systems to evaluate the risk management and accounting policies necessary for reporting the financial statements. Moreover, several organizations experience issues in compliance of corporate governance principles and recommendations. It has been observed that the major issues includes in directors duties with respect to conflicts of interest, duty of care, remuneration policies and compliance of statutory regulations (Tao and Hutchinson 2013). Various private companies face issues related to limited resources that affect the appropriate monitoring of business activities and risk management procedures hence; the effective governance is not achieved. Sustainability and growth of an organisation not only depends on the financial performance and high profitability but also on the good governance towards company as well as towards society (Korschun, Bhattacharya and Swain 2014). Companies are required to manage corporate social responsibility as part of corporate governance which refers to the business practices for the benefit of society. The management of the organisation is responsible to monitor the environmental factors that affect the social hygiene and safety. For instance, release of greenhouse gas or harmful carbon gas by the organisations engaged in the production of oil and gas products affects the environment and cause harm to the society (Cheng, Ioannou and Serafeim 2014). Therefore, the management is responsible to take measures to reduce the emission of such harmful gas for the protection of community. In addition, the management of the company is responsible to report transparent and accountable financial information in the interest of stakeholders and potential investors so that the process of risk management is considered accurately. Therefore, growth of an organisation relates to the good corporate governance and best practices in CSR together with the appropriate risk management process. Conclusion Success of a business organisation is a primary objective that incorporates financial performance, best practice of corporate governance and appropriate process of risk management. In view of the above discussion, I can conclude that best practice of corporate governance associates with specific responsibilities of companys internal stakeholders who are required to manage, perform and evaluate the business activities. Such performance is considered for the best interest of company as well as the shareholders and consumers. Accordingly, it is essential to manage potential risk and uncertainties within the business entity that assists in making business decisions for investment, cost control and maximising profitability. 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Williams, O.F., 2013.Corporate social responsibility: The role of business in sustainable development. Routledge. Woolworthsgroup.com.au. 2017. Woolworths Group: Quality Brands and Trusted Retailing. [online] Available at: https://www.woolworthsgroup.com.au/ [Accessed 12 Mar. 2017].